The former Prime Minister has commissioned a group of economists to produce alternatives to the forecasting methods used by the Government’s official budget watchdog.

Liz Truss is set to launch her biggest economic challenge to the Government yet after the Chancellor ruled out cutting taxes this year.

The ex-prime minister’s new Growth Commission will have its formal launch on Wednesday, with economists proposing an alternative forecasting method for the effect of tax and spending changes on the public finances.

Free-market Conservative MPs are urging Jeremy Hunt to reform the tax system and reduce the overall burden in a bid to shore up the Conservatives’ core vote ahead of the next general election.

But the Chancellor has privately concluded that with inflation more stubborn than previously expected, it will not be possible to cut taxes at the upcoming Autumn Statement. A Treasury source said: “We are slowly running out of time.”

The Growth Commission, which consists of a number of leading economists from around the world, is expected to argue that the economic modelling used by the Government should be more “dynamic”, meaning that it takes account of the effect that changing the tax rate or spending more on public services can have on economic growth over time.

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