The Paris-based organisation’s annual study of taxes across the developed world found that Britain’s “tax wedge”, which measures total taxes paid by both employees and employers, minus cash benefits received by working households, increased by 2.45 percentage points in 2025, the largest rise among its 38 member nations.

The OECD attributed the surge primarily to Chancellor Rachel Reeves’ autumn 2024 Budget, which raised the rate of employer national insurance contributions, compounded by fiscal drag. The next largest increase was recorded in Estonia, at 1.95 percentage points, with Germany and Israel the only other countries to exceed a one-percentage-point rise.

Despite this rapid increase, the UK’s overall tax wedge of 32.4% remains below the OECD average of 35.1%, which ranges from 0% in Colombia to 52.5% in Belgium.

The Labour Party had pledged not to raise taxes on working people ahead of the 2024 election, though the OECD’s measure encompasses employer taxes as well as those paid directly by workers. The Chancellor has maintained that her decisions were essential to stabilise the public finances and restore services eroded over 14 years of Conservative-led government. Nevertheless, overall taxes as a share of the economy have reached their highest level since the Second World War.

The pressure on the UK government intensified further last week when the International Monetary Fund forecast that taxes as a share of the economy in the UK are set to climb at the fastest rate in the G7 between 2024 and 2031. The IMF also warned that a further escalation in the Middle East conflict could trigger a global recession, with the UK potentially more exposed than any other G7 nation.