Rachel Reeves has “one hand tied behind her back” as she considers how to balance the books next month in her first budget, a leading economic thinktank has said, after she ruled out increases to the four main taxes that account for 75% of all revenues.

The Institute for Fiscal Studies (IFS) said Labour had promised not to raise income tax, national insurance, VAT or corporation tax before the budget, heightening speculation that Reeves will seek to increase revenues from rises in capital gains tax, inheritance tax and stamp duty on property sales.

The IFS said there was a danger the chancellor would seek extra revenues from “economically damaging” tax rises that only bring short-term relief to the government’s spending deficit.

The IFS said Labour entered office faced with “unenviable arithmetic” given that the previous government had pushed tax revenues to the highest level since the 1940s, while also imposing “big cuts to public investment and some public services”.

“Merely avoiding spending cuts would – if debt is to fall – likely require raising tens of billions of additional revenue by 2028-29,” the report said.

Official data on Friday put further pressure on the government to raise taxes after it showed that Britain’s national debt had risen to the highest levels since the 1960s.

Soon after taking office, Reeves said the Conservatives had left a £22bn hole in the public finances, mainly from underfunded pay increases for public sector workers and a deficit of more than £6bn in the Home Office budget. This shortfall was only partly filled by the £1.4bn saving from restrictions to the pensioners’ winter fuel allowance.

Saying that “Reeves has not made life easy for herself”, the IFS said government spending could still be supported by large injections of funds from taxes outside the big four, but it would take courage to carry through the necessary changes. It said England could copy the example set by Scotland and increase the council tax that applies to homes ranked from band E to H, raising £1.5bn in extra revenue.

“Going further and increasing rates by 50% on the highest-value properties – bands F to H – would bring in closer to £3.5bn,” the IFS said in a report, Options for Increasing Taxes.

Changes to inheritance tax, which is on course to raise £7.5bn in this financial year, could increase the Treasury’s firepower, it said. “A good start would be ending, or at least capping, the unjustified exemptions for pension wealth, business assets and agricultural land – a change that would raise around £2bn a year assuming no behavioural response,” it added.

Counselling against an increase in stamp duty on property sales, the IFS said this would repeat the mistake made by George Osborne, who increased insurance premium tax to a level that deters people from buying insurance. “[Stamp duty on property] … should be reduced or – even better – abolished, and certainly not increased,” the report said.

Isaac Delestre, an IFS research economist, said: “With large swathes of the tax system seemingly off-limits due to Labour’s manifesto commitments, the chancellor is going into this year’s budget with one hand tied behind her back. There will be a temptation to increase revenues in ways that would be economically damaging.

“But Rachel Reeves also has the power to fix some of the more glaring deficiencies of our tax system: taxes on pensions, capital gains and inheritances – to name just three – are all crying out for reform.

“If she takes the opportunity to improve taxes, as well as increase them, she could be rewarded not only with more revenue but also with a tax system that is fairer and less of an impediment to growth.”

Can someone gift the prime minister a designer spade? He wants to keep digging. If Keir Starmer were a celebrity, this week we’d be looking for the black hole in his publicist’s brain. Alas, these are mildly testing times for anyone who bought into the always ridiculous idea of No Drama Starmer. The prime minister has officially graduated into his Some Drama Starmer era, and – like all prime ministers ever – is on the ineluctable journey towards his All Drama Starmer era. This journey is of variable speed, of course – sometimes it takes 11 years, and sometimes it takes 44 days.

The PM is never going to be Loves the Drama Starmer, though, judging by his amusingly defensive response that it is basically essential for him to be by far and away parliament’s biggest receiver of hospitality and freebies, as well as being one half of the sort of couple on a combined salary of over two hundred grand who can’t buy their own clothes, and also a guy who has a weakness for multiple pairs of designer glasses. Forgive me – “luxury eyewear”, with a value of £2,485.

I sympathise with his football security issue but can’t quite keep a straight face over the hammy melodrama of the statement: “… never going to an Arsenal game again because I can’t accept hospitality is pushing it a bit far”. We could be mere days away from an explanation that accepting £4,000-worth of Taylor Swift tickets off the Premier League is a basic human right. (I’m afraid my reaction to the phrase “£698 of Coldplay tickets” is: how many thousand Coldplay tickets is that?)

Nor did Starmer completely nail the tone when addressing the full-spectrum briefing war currently being waged between his chief of staff, who now gets paid more than him and is fine with that; internal enemies of his chief of staff, who get paid less than they were expecting and are not fine with it; his senior adviser and political strategist; lesser spads; and – I think? – the cabinet secretary.

I’m finding the angles on this quite hard to keep up with, but the general vibe of his No 10 operation is the sort of snakepit you may expect to find in the Kuntsevo Dacha 15 minutes after Stalin was discovered on the shagpile. I would even go so far as to say it could rival a breakfast television studio. I had to forcefully press my challenge buzzer when I heard Starmer explain to BBC South East that he was “completely in control”. Oof. Once upon a time that was what Eamonn Holmes thought.

Moving on to the choice of donors, can we really judge a man by the man he lets smother him in high-end glasses? Let’s hope not. Lord Alli was ennobled by Tony Blair – who, until he became one of them, was always pathetically impressed with very rich people – and is now the purchaser of the Starmers’ wardrobes and arsenal of fancy specs. This latest piece of beneficence seems to have earned his lordship at least a temporary Downing Street security pass. As for the type of person we’re dealing with … listen, I don’t want to say Waheed Alli “divides opinion”, because you know what? This week I asked several people in the know about him to give their opinion and they all said the exactly same thing. Unfortunately, it’s a single word that we don’t use in the Guardian unless it’s in reported speech.

That all this should be taking place in the final weeks of a three-month scare buildup to the budget seems at best unfortunate, and surely something that either one’s chief of staff or political adviser or tailor should have spotted as a danger area. Even while he was wanging on about his corporate hospitality, Starmer was declining to discuss next month’s doom budget on the basis that, “I don’t want to risk putting the fear of God into people.”

Well, it’s a bit late for that. Labour took office and immediately declared things to be so dire that they were going to have to do awful and painful things to combat them – but will have left it three months before they finally explain what those awful and painful things are. This, as the former chief economist to the Bank of England Andy Haldane and many others have pointed out, has created a sense of “fear and foreboding and uncertainty among consumers, among businesses, and among investors”.

Truly the hat-trick. The current freebies row taking place during that particular information vacuum consequently feels even worse. It suggests that Starmer is a guy who talks to the public like an undertaker but in private likes the finer things in life. More than that, he feels entitled to them. That is no one’s favourite combination.

Having said that, I don’t think it’s the within-the-rules odour of impropriety that is the biggest problem for Starmer, although it is definitely a problem. Taking essential things away from those with not very much at all while giving the appearance of being perfectly happy to help yourself to luxuries is not a great look. But the much bigger vulnerability, in my appraisal, is that thing that maps on to what a lot of people are always, always prone to thinking about Labour: that they’re very free and easy when they’re spending other people’s money.

According to Ipsos polling in the FT today, half of British voters say they are disappointed in how Labour has governed so far, with Starmer’s approval ratings worse than those of any of his predecessors except Liz Truss. Considering that this comes more than a month before the doom-budget outlines their plans for our money, Starmer may find the next set of ratings well worth misplacing his many pairs of spectacles for.

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David Lammy chaired a Cobra meeting to discuss preparations to evacuate remaining Britons from Lebanon, having already urged UK nationals to leave the country amid hostilities with Israel.

The foreign secretary led meetings in Whitehall on Friday as officials try to avoid a repeat of the chaos in which British people scrambled to leave Afghanistan when the Taliban took over in 2021.

There is no order to evacuate citizens yet, but fears of an all-out war are growing after an escalation of Israeli air strikes and targeted attacks on Hezbollah militants with exploding devices.

Lammy expressed concern about “rising tensions and civilian casualties” in Lebanon after strikes on Hezbollah targets in the south of the country on Thursday.

He repeated the Foreign Office’s warning to British nationals, urging them to leave Lebanon “while commercial options remain”, as the situation “could deteriorate rapidly”.

Hezbollah’s leader, Hassan Nasrallah, has vowed to retaliate after the attacks that targeted Lebanese militants with exploding pagers, killing and injuring many people.

On Thursday evening, Lammy said he had spoken to the Lebanese prime minister, Najib Mikati, and “expressed my deep concern over rising tensions and civilian casualties in Lebanon”.

He said that they had discussed “the need for a negotiated solution to restore stability and security” across the border between Israel and Lebanon.

Ministry of Defence insiders said no order had been given to organise an evacuation of the 16,000 or so British nationals in Lebanon but they said that plans were being sharpened this week, in response to the deteriorating situation.

The decision not to do so indicates that Israel has not told the UK it is planning a significant intensification of military action against Hezbollah, even allowing for the exploding pager and walkie talkie attacks widely attributed to its security agencies.

Military personnel and Foreign Office officials were deployed in early August as as part of preparatory planning for a range of possible conflict scenarios. These were being revised and updated this week, defence sources added.

Several European operators suspended flights in and out of Beirut and Tel Aviv this week and the only direct flights available out of the country, according to the flight comparison site Skyscanner, are with the Lebanese carrier Middle East Airlines.

Military transport planes could be made available if there are no commercial flights, such as the A400M Atlas or the C17 Globemaster. Chinook twin engine helicopters could also be used to evacuate smaller numbers in a hurry. The RAF base at Akrotiri in Cyprus would be the hub of any air evacuation effort.

The first choice of evacuation point would be Beirut’s international airport given the quality of the facilities, although it could prove problematic if there is a major outbreak of fighting, rendering the facility unsafe. The 2021 evacuation of Afghanistan used Kabul’s main airport, although evacuations from Sudan in April 2023 were done via an airbase near Khartoum.

Israeli warplanes carried out dozens of strikes across southern Lebanon late on Thursday, hours after Nasrallah threatened “tough retribution and just punishment” for the wave of attacks that targeted the organisation with explosives hidden in pagers and walkie-talkies.

The Israeli military said it had hit hundreds of rocket launchers that it said were about to be used “in the immediate future”.

The bombardment included more than 52 strikes across southern Lebanon, the Lebanese state news agency NNA said. Three Lebanese security sources told the Reuters news agency that they were the heaviest aerial strikes since the conflict began in October.

The hostilities between Israel and Hezbollah followed Hamas’s attack on Israel on 7 October, and Israel’s subsequent war on Gaza. Both Hamas and Hezbollah are backed by Iran.

A FCDO spokesperson said: “The foreign secretary has chaired a meeting of COBR this morning on the latest situation in Lebanon and to discuss ongoing preparedness work, with the risk of escalation remaining high.

“The safety of British nationals is our number one priority which is why we’re continuing to advise people to leave Lebanon now while commercial routes remain available.”

The scale of the challenge facing Rachel Reeves ahead of the autumn budget has been laid bare by a rise in Britain’s national debt to the highest levels since the 1960s and a collapse in consumer confidence.

Figures from the Office for National Statistics (ONS) showed the government’s outstanding debt pile reached 100% of gross domestic product in August, the highest level since 1961, as monthly borrowing rose by more than expected.

Labour has warned repeatedly that the economic inheritance from the Conservatives will require “painful” decisions ahead of the 30 October budget, including tax rises and cuts to welfare benefits and other spending.

Figures released by data provider GfK on Friday revealed a sharp fall in consumer confidence in September to the lowest level since March, blaming households’ concern about Reeves’s cuts to winter fuel payments and the prospect of further spending restraint at the budget.

“Consumers’ reaction to the government’s warnings shows that Reeves will need to be careful to not overdo the fiscal tightening next month,” said Elliott Jordan-Doak, a senior economist at the consultancy Pantheon Macroeconomics.

According to the latest snapshot from the ONS, government borrowing – the difference between public sector spending and income – was £13.7bn, an increase of £3.3bn on the same month a year earlier, and the third highest August deficit since monthly records began in January 1993.

The national debt – the sum total of every deficit – rose by 4.3 percentage points during the year to August to 100% of GDP, meaning an overall debt pile equal in sie to the annual value of everything produced in the economy.

Darren Jones, the chief secretary to the Treasury, said the figures demonstrated the challenging state of the public finances left by the Conservatives, which would force Labour to take “tough decisions” to rebuild the economy.

“When we came into office, we inherited an economy that wasn’t working for working people. Today’s data shows the highest August borrowing on record, outside the pandemic. Debt is 100% of GDP, the highest level since the 1960s,” he said.

The figures came amid growing pressure on the government to ease tax increases and spending cuts pencilled in for the 30 October budget, after Keir Starmer told the public to expect “painful” decisions after finding what Labour called a £22bn hole in the public finances.

Reeves announced in August she would scrap winter fuel payments for most pensioners, shelve plans for social care reform and axe road, rail and hospital investment as the first stage of a plan to reduce borrowing.

However, concerns are growing within Labour ranks that the downbeat tone is damaging the government, while economists have warned that measures hitting consumer confidence could hurt growth and jobs.

The latest snapshot of the public finances from the ONS showed that while tax receipts grew strongly in August, this was outweighed by higher expenditure – largely caused by benefits rises and higher spending on public services owing to increased running costs and pay.

While official figures had put the debt ratio above 100% last year, the ONS said revisions meant this was the first time since 1961 the reading had equalled the size of the economy.

Matt Swannell, the chief economic adviser to the EY Item Club, said: “At what is almost the halfway point of the fiscal year, the UK’s fiscal position remains challenging, and Treasury analysis suggests that the situation may deteriorate further over the remainder of the year.

“The government will likely have to increase spending over the next few months, due to a combination of accepting the recommendations for higher pay increases from public sector pay boards and non-labour cost overruns across a range of government departments.”

Keir Starmer won the election because of a ruthless focus on winning over people who voted Conservative in 2019, but the party has been left with a “fragile coalition” of supporters who will abandon it if it fails to deal with the cost of living crisis and the NHS, a thinktank has said.

In a report by Labour Together, an influential Starmerite thinktank, researchers concluded voters had “cautiously hired” the prime minister “on a trial basis”, and he was “liable to prompt dismissal” if his government deviated even slightly from focusing on voters’ priorities.

The thinktank reported their findings to key No 10 figures, including Pat McFadden and Morgan McSweeney, in a Cabinet Office meeting last week.

The researchers, who are regarded as the government’s “critical friend”, said they were honest and direct about the challenges they believed lay ahead for Starmer’s top team. Officials were told that if the government did not deliver for voters, who have become more transactional than ever, they could easily face the same fate the Conservatives did after the 2019 election.

The report is based on a survey of 10,000 people across the country in polling and small focus groups, asking them why they voted the way they did. Labour Together had decided to launch this assessment of Labour’s performance once the general election was called in May, regardless of the result at the ballot box.

“Middle Britain” voters decided the outcome of the 2024 general election, the analysts said. They summarised this group of voters as being in the ideological centre of the country, slightly to the left on economic issues and more “authoritarian” on cultural issues.

The report notes it was Middle Britain’s “desire for change that mattered most” in the election, with Alex, a constituent from Leigh and Atherton, in north-west England, telling a focus group: “I’ve always voted Conservative, but it got to the point where I was thinking there’s got to be something better than this.”

However, Labour Together notes the party’s focus on demonstrating to people in “Middle Britain” that it shared their values was not without its cost, with Labour losing seats in Bristol West and Islington North to its left; Thangam Debbonaire and Praful Nargund lost to the Green party’s co-leader Carla Denyer and Jeremy Corbyn respectively. Jonathan Ashworth, the chief executive of the thinktank, also lost his Leicester South seat to the independent MP Shockat Adam.

While the research does not include analysis of independent seats, which is expected to come at a later date, it does note that many traditional Labour voters in Muslim communities backed independent candidates because of Labour’s position on the war in Gaza. It highlights a strong correlation between a decline in Labour’s vote share and the proportion of Muslims in a constituency.

“The depth of feeling about the situation in some, particularly Muslim, communities was profound,” the report states. “Its impact on voting intention was understated ahead of the election, in part because high-quality polling of ethnic minorities is rare.”

The issue cost Labour four seats, which went to independents. In the 17 seats where independent candidates finished second, Labour holds a lower average majority than it does where the Conservatives finished second.

However, the thinktank argues Labour’s biggest threat comes from the right, with the Tories being Labour’s biggest opponent, followed by Reform. Labour holds only an average majority of 14% over the Tories across all seats where they finished second. With Reform, Labour’s majorities average about 25%.

Morgan Wild, the chief policy adviser at Labour Together and co-author of the report, said: “Middle Britain needed to see that Labour had changed since 2019. It had. The 2019 Conservative voters it attracted were in the centre ground of British politics – without them, Labour simply could not have secured this decisive victory.

“Elections are won in the centre ground – a basic electoral truth Labour has a habit of forgetting. It mustn’t do so again: instead, the government must stay relentlessly focused on voters’ top priorities.”

A government figure said: “The findings reinforce that if we take our eyes off why voters elected us, we won’t be here in five years.”