LONDON, Oct. 15 (Xinhua) -- The British government may need over 20 billion pounds (26.13 billion U.S. dollars) to meet its increased spending goals and investment demands, a London-based think tank said in a report on Monday.

The government may need to introduce tax hikes to prevent a return to austerity in the upcoming autumn budget. This would enable the government to boost departmental spending and make critical investments, according to the report by the Resolution Foundation (RF).

Despite recent positive developments in the economy and inflation rates, the RF report noted that fiscal headroom would be eroded by these spending pressures.

However, the report also pointed out the complexity of this task, given the new government's pledge not to raise key taxes like income tax or value-added tax, suggesting that taxes such as inheritance and capital gains might become targets instead.

"Achieving a pro-growth and investment-friendly economy would necessitate a revision of the fiscal rules' definition of debt," said Cara Pacitti, a senior economist with the think tank.

"This could include expanding the debt definition to encompass the Bank of England and adopting a broader measure, such as public sector net worth, which accounts for the asset value created through increased investment," the economist added. Enditem

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