The Treasury could face a £30 billion funding gap unless difficult decisions on tax and spending are addressed, the National Institute of Economic and Social Research has warned.

In a published economic evaluation, the institute identified deferred fiscal choices and rising global borrowing costs as the pressures behind the risk. Its warning links decisions within the Government’s control to the cost of borrowing in international markets.

The £30 billion figure describes a potential shortfall, rather than an established funding gap. The central question is how tax and spending decisions can address that exposure while borrowing costs rise.