Concerns rise about Britain's growth plans, prompting speculation of potential tax increases.

• Concerns are increasing about the Labour government's growth and investment strategy, as one analyst predicts possible future tax increases.
• Last week, Finance Minister Rachel Reeves unveiled a set of reforms, including financial services deregulation and steps to increase pension investments.
• If regulatory changes don't stimulate the economy, James Smith, an economist at ING, believes we may see another round of tax increases, according to CNBC.

Concerns are increasing about the Labour government's growth and investment strategy, with one expert predicting possible tax increases as early as next year.

The U.K. Finance Minister Rachel Reeves recently announced a series of reforms, including financial services deregulation and measures to boost pension investments, as part of a series of changes aimed at revitalizing the country's economy.

If the economy grows at a faster rate, the government may not need to increase taxes, as overall revenues will increase. However, Labour must strike a delicate balance between keeping taxes high enough to fund public services and leaving businesses with enough money to invest and expand.

James Smith, an economist at ING, stated on CNBC's "Squawk Box Europe" on Friday that the Chancellor is facing a delicate situation with this issue.

If regulatory changes in finance, planning, and other areas do not stimulate the economy, there may be a need for additional tax increases, according to him.

Last week, John Grieve, the former deputy governor of the Bank of England, voiced his skepticism about the effectiveness of the proposed measures in promoting growth. He argued that financial services deregulation and pension reforms were not "game changers."

Gieve stated on CNBC on Friday that she believes Reeves will need to undertake larger initiatives to increase private investment, according to planning and infrastructure projects as the most effective methods for boosting the economy.

The reforms were introduced two weeks after Reeves' tax-and-spend budget, which included £40 billion ($51.8 billion) in tax increases and changes to the country's debt rules, measures Reeves said were necessary to address the U.K.'s deficit.

The Office for Budget Responsibility initially predicted that the measures would boost the economy in the short term, increasing its economic growth forecast by several percentage points over the next two years, but now expects U.K. real GDP growth of 1.1% in 2024, followed by expansion of 2% in 2025, before falling to 1.5%.

The National Insurance payroll tax caused significant harm to businesses, and Labour's plans may further discourage hiring and investment.

If we don't see growth coming through, the real risk for the chancellor and businesses is that we get more of the same next year at the next budget, according to ING's Smith.

The Labour government did not promptly provide a comment on potential tax modifications in response to CNBC's inquiry.

'Desperate' growth rates

In the third quarter, the U.K. economy barely grew, with a 0.1% expansion that was less than anticipated, according to data from the Office for National Statistics. GDP fell by 0.1% in September, which was below expectations and followed the previous month's growth of 0.2%.

Gieve remarked on the GDP data, stating that the 1% growth rate, which has been consistent since the Financial Crisis, is a well-established trend that requires immediate action.

The third quarter was marked by significant uncertainty in the U.K., as the government faced criticism for its economic forecasts and investor confidence was negatively impacted.

Some analysts suggested that the government's fiscal plans and growth strategy should be given more time to take effect.

Sarah Coles, head of personal finance at Hargreaves Lansdown, cautioned against measuring success in the short-term, as it could prematurely declare the entire endeavor a failure before green shoots have a chance to emerge, in an email to CNBC on Monday.

Paul Dales, the chief U.K. economist at Capital Economics, stated that the plans would be evaluated based on the economic growth's performance against the OBR forecasts over the coming months and years. Any tax changes would then follow suit.

If growth remains weaker and this weakness is expected to persist, then it may be necessary to increase taxes to achieve the forecasted levels of tax revenue, according to Dales in an email. Capital Economics predicts a slight increase in growth. If there is additional pressure to increase government spending while everything else remains constant, higher taxes could be anticipated, he added.

The British economy is struggling, and markets will closely monitor the effectiveness of the government's reforms in stimulating growth.

Coles stated that tax hikes are unlikely to occur in the next fiscal statement in March.

Coles stated that there is always a possibility of being hit by something unexpected, which disrupts plans, but currently, Labour has committed to one significant Budget annually. Therefore, any substantial change earlier would be a significant surprise, particularly after the significant fiscal event in October.

"Whether the government has got the balance right will become clearer in the upcoming months."