Unemployment is on course to hit a five-year high as struggling businesses brace for Rachel Reeves to launch another tax raid.

The joblessness rate is expected to hit 4.9pc in 2026, according to gloomy new forecasts, a level last seen in early 2021 when Britain was still in the depths of lockdown.

This is up from the current rate of 4.7pc, and much higher than the 4.1pc in August last year, as the jobs market battles plummeting vacancies.

KPMG, the consultancy giant behind the estimates, said business surveys suggested the labour market was “unlikely to see a reversal in fortune in the near term” amid fears that the Government is poised to squeeze companies further.

Ms Reeves, the Chancellor, is scrambling to plug a black hole in the public finances potentially as large as £50bn owing to sluggish economic growth and costly policy about-turns.

She has already mounted a record £40bn tax raid on business, including a widely-criticised increase in employer National Insurance (NI) rates that was branded a “jobs tax”.

But the dire state of the public finances has fuelled speculation that she will now seek to raise further revenue from companies, landlords and investors, in order to stick to Labour’s pledge not to tax “working people”.

This is alongside concerns that Labour’s workers’ rights overhaul will have a “chilling effect” on hiring by handing unions more power.

Against this backdrop, KPMG warned that it expected the number of vacancies to keep falling in the second half of the year as nervous bosses restrict investment, leading to slower economic growth.

The consultancy warned that “uncertainty in the run up to the autumn Budget in November is set to keep hiring activity muted, with firms likely to postpone recruitment decisions until there is greater clarity on potential cost increases”, adding: “As a result, we expect unemployment to gradually rise further over the coming year, increasing from 4.7pc in July and peaking at 4.9pc in 2026.”

KPMG is forecasting that GDP will rise by 1.2pc this year before slowing to 1.1pc in 2026.

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The numbers will serve as a fresh blow to the Chancellor at a time when government borrowing is spiralling, productivity is lagging, and critics warn that Labour’s tax and spend policies risk choking off growth.

On Sunday, Mel Stride, the shadow chancellor, accused Ms Reeves and Labour of being “asleep at the wheel”.

“Rachel Reeves promised stability, but she’s delivered spiralling debt and rising borrowing costs,” he said.

“She now has a black hole to fill just to keep to her own rules – the rules she already rewrote to allow even more borrowing.

“The price? Yet more tax rises in the autumn. More pain for working people. And a debt burden our children will be paying off for decades.

“This is not a government in control. It’s one stumbling from crisis to crisis, with no plan to fix the mess.”

Ms Reeves has rejected claims that she is facing a £50bn shortfall, but the number is still widely expected to be tens of billions.

Solving this deficit will require either massive tax rises or spending cuts.

However, analysts are expecting the former after the Government’s earlier attempts to reduce welfare spending and winter fuel payments for pensioners were scrapped following backbench rebellions.

Under her election pledges, Ms Reeves has so far ruled out raising income tax, VAT or employee NI contributions to protect working people.

However, economists have suggested she could extend a stealth raid on households by freezing the threshold at which workers begin to pay income tax, raising as much as £8bn for the exchequer.

Other options include windfall taxes on gambling companies, an inheritance tax raid, the abolition of dividend tax breaks and a potential wealth tax.

She is also said to be mulling various property taxes, such as adding extra bands to council tax for the most expensive homes worth more than £1m or ending the exemption from capital gains tax for primary residences worth more than £1.5m – also known as a “mansion tax”.

James Nation, a former Treasury adviser under Rishi Sunak, said increases to capital gains tax would be “very tricky”.

Speaking to Knight Frank’s Housing Unpacked podcast, he said: “I see this as similar to how the British public think about inheritance tax.

“It is uniformly unpopular even though the vast majority of the public won’t qualify and that’s because of the principle.

“You’d be saying to someone that, in theory, if you improve the state of your property, there is a world in which the taxman would be able to come and take away some of that gain. That is a hard political sell.”

However, he claimed that Torsten Bell, the Labour MP and former boss of Left-leaning think tank the Resolution Foundation, who is playing a prominent role in the forthcoming Budget, was “sympathetic to broadening the base on national insurance” and could support extending the tax to landlords.

A Treasury spokesman said: “We are a pro-business government that has helped interest rates to fall five times, struck three major trade deals with the EU, US and India, we are reforming business rates, and capped corporation tax at 25pc.

“We are delivering on our Plan for Change to put more money in people’s pockets by increasing the national living and minimum wage, and real wages have grown more since the election than the first decade of the previous parliament.”

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