'Taxes will rise after poll'

Economists today sounded a new warning of looming tax rises.

In a poll of independent experts, the vast majority predicted increases if Labour wins the general election.

They believe the Government will be forced to raise more in taxes to fund pledges to improve services.

The consensus emerged in interviews with 26 economists, most of them based in the City.

Twenty-three of the experts - from banks including HSBC, Deutsche, JP Morgan, Citigroup, Baring Asset Management, the Royal Bank of Scotland, and the Bank of America - say they expect Labour to raise taxes.

Five of the 26 believe the Conservatives would do the same, despite the party's central policy of lower taxation.

The survey will dismay the Labour Party, which has put the economy at the centre of its bid for a third term.

Party strategists hope Chancellor Gordon Brown's record on low mortgage and interest rates, low inflation and high employment, will prove a vote-winner.

However, Labour has refused to rule out raising National Insurance during pre-election press briefings.

Officials said it would be " irresponsible" to guarantee they would not make any rises over a whole parliament. The poll was carried out by the Daily Telegraph, which names the economists interviewed.

The newspaper today claims Labour's election manifesto will leave the door open for rises in National Insurance.

It says the document, to be published next week, will repeat the limited and specific pledge Tony Blair gave ahead of the last two general elections not to raise the basic or top rates of income tax, or extend VAT to food, children's clothes, books, newspapers and public transport fares. The wording leaves open the option of increasing National Insurance or refusing to raise thresholds, such as personal allowances, in line with earnings.

One of the economists interviewed, Robert Chote of the Institute for Fiscal Studies, said: "Will taxes have to go up if the Tories win? No, as long as they can deliver the spending cuts they have promised.

"Will taxes have to go up if Labour wins? Yes, if we are right that revenues will be weaker than the Treasury hopes and if Gordon Brown sticks to his Budget goals for the public finances."

Although Britain has recorded its 50th quarter of continuous economic growth and has the lowest interest rates and unemployment since the Seventies, there is concern in the City about the amount of money the Chancellor is borrowing. His last Budget showed a deficit of £34billion.

At a press conference yesterday, Mr Blair claimed current tax levels were "sufficient" for the Government's "foward plans".

However, the Conservatives accuse the party of concealing its real tax plans. Shadow chancellor Oliver Letwin has repeatedly challenged the Prime Minister to "come clean" about Labour's intentions.