The UK Finance Minister Rishi Sunak need to announce big tax hikes to the tune of extra 60 billion pounds ($83 billion) in order to aid the COVID-19 hit to the public finances, the Institute for Fiscal Studies (IFS), Britain’s leading independent microeconomic research institute, noted in its latest study.

However, the British think tank added that Sunak’s March 3 budget is too soon for such a move.

IFS Director Paul Johnson said: “For now, Mr. Sunak needs to focus on support and recovery. A reckoning in the form of big future tax rises is highly likely, but not as yet inevitable.”

“But there is tremendous uncertainty around this figure: borrowing would fall to pre-pandemic levels of around 50 billion pounds under Citi’s much more optimistic scenario and would remain at around 190 billion pounds under their more pessimistic scenario,” the IFS said.

GBP/USD reaction

GBP/USD is nearing 1.3950, underpinned by the ongoing successful vaccination campaigns in the UK and the likely easing of the activity restrictions.

The spot is at fresh 34-month tops, adding 0.31% on the day.