The Treasury has lashed out at Britain’s stagnant productivity hours after receiving critical forecasts from the Office for Budget Responsibility (OBR) that set the scene for a tax-raising Budget.

In an unusual intervention, the Treasury admitted that growth in living standards had been disappointing as it attacked Whitehall spending.

A Treasury source said: “For years we have been saying that stagnant productivity has been holding working people back and that there is too much wasteful spending in government – with asylum spending at the top of the list. We are getting on with tackling that.”

Britain’s fiscal watchdog delivered its first evaluation of the economy on Friday, ahead of November’s Budget. The forecasts set the boundaries for Rachel Reeves as she attempts to balance the books.

It is believed the OBR warned the Chancellor that the economy’s long-term prospects were also more pessimistic, in a move that economists said would require tax rises of £30bn to balance the books.

The beleaguered Chancellor was dealt another blow by JP Morgan, which warned Britain faced tax rises or spending cuts of as much as £130bn over this parliament.

The investment bank said tax raids were likely to become the norm for the rest of the parliament if Ms Reeves wanted to keep debt from spiralling out of control.

Allan Monks, at JP Morgan, said Ms Reeves could be forced to find another £50bn to £80bn of tax rises this parliament, having already pencilled in £50bn comprised mostly of tax rises during her first year in power.

Mr Monks warned the November Budget was “likely to deal with only part of the remainder”, suggesting Britain will be trapped in an annual cycle of tax rises.

He said Britain’s “uniquely high borrowing costs” made it particularly vulnerable, with Ms Reeves’s fiscal plans “barely” meeting “even the loosest definition of sustainability”.

On top of that, the fiscal watchdog’s projections underpinning the plans for how fast the economy will grow were “optimistic” and “unlikely to be realised”, he said.

If the £130bn were raised solely through taxes, rather than by cutting spending, Labour would have presided over a record tax-raising parliament.

It came as the tax and spending watchdog warned Ms Reeves that growth next year would probably be lower and inflation higher than predicted just a few months ago.

Ms Reeves will use the next seven weeks to try to convince the watchdog that Labour’s string of trade deals, planning reforms and a deregulation drive will be enough to at least partially offset the damage of the downgrade.

Sir Mel Stride, the shadow chancellor, said Ms Reeves only had herself to blame for the underperformance in the economy.

He added: “The Chancellor can avoid the questions, but she can’t escape the facts. Under Rachel Reeves we have seen inflation double, debt balloon, business confidence at its lowest level, borrowing costs at a 27-year high, and taxes up – with more pain on the way in the autumn.”

Ms Reeves is coming under pressure from Labour backbenchers to use the Budget to lift the two-child benefit cap in a move that could cost more than £3bn a year.

The Chancellor also has to find money to pay for a humiliating about-turn on welfare reform and winter fuel payments that will cost more than £5bn.

Separately, Andrew Bailey, Governor of the Bank of England, told Downing Street that regulators were not to blame for the dismal performance in the economy seen after the financial crisis.

The Governor said politicians had made clear choices in the wake of the global crash to defuse an “unstable and dangerous banking system” that could only be resolved by “massive state intervention at an unacceptable cost to taxpayers”.

However, he rejected the argument that over-regulation had stymied growth, adding: “I push back at the line of argument that post-crisis financial regulation caused the fall in productivity growth, by restricting business investment in the economy.”

Mr Bailey’s comments follow Ms Reeves’s warning that regulation was acting like a “boot on the neck” of business, language that he subsequently rejected.

He urged policymakers around the world not to “throw the baby out with the bathwater” with a deregulation drive. “There is no trade-off between financial stability and objectives like growth and competitiveness,” he said.

The International Monetary Fund also suggested that Labour’s pursuit of industrial policies risked pushing up prices and public debt.

It noted that spending on subsidies and other targeted tax breaks was on average higher in the UK than the EU as it warned that in some cases policies had “lower[ed] overall productivity” by reducing competition.

The Treasury said it would not “give a running commentary on the OBR’s forecasts”.

A source added: “There is a lot of rubbish out there from people who claim to know what is in the Budget before decisions have been made. The Chancellor will make those decisions – no one else.”

Broaden your horizons with award-winning British journalism. Try The Telegraph free for 1 month with unlimited access to our award-winning website, exclusive app, money-saving offers and more.