Pledges to slash taxes by the Tory leadership candidates are "unrealistic" unless they are matched by spending cuts, a UK economic research institute warned today.
The Institute for Fiscal Studies (IFS) said large, permanent tax cuts could add to pressures on the public purse as the economic outlook deteriorates.
Both Rishi Sunak and Liz Truss have promised tax cuts, but say their plans are affordable.
Britain will find out who its next prime minister is on September 5.
The soaring cost of living will be among the biggest challenges facing whoever succeeds Boris Johnson, with calls for more help growing louder.
Foreign Secretary Ms Truss, who is the favourite to win the race, has pledged to scrap April's National Insurance rise to help households and cancel a planned rise in Corporation Tax.
She has argued high taxes are "potentially choking off growth" in the economy.
Sunak promises
Meanwhile, former Chancellor Mr Sunak has promised to reduce VAT on domestic energy bills from 5% to zero, and to cut 3p off Income Tax by late 2029.
However, he says he will only cut taxes "once we've gripped inflation" and claims Ms Truss's pledges are unaffordable and won't help those on low incomes.
But Carl Emmerson, deputy director of the IFS, told the BBC that both candidates' plans would be unaffordable without spending cuts - none of which have been proposed by the campaigns.
"These tax cut promises are unrealistic unless they're going to set out detailed, deliverable spending cuts on a comparable scale," he said.
"In reality, there will be a need to spend significantly more - especially given the pressures on households with energy bills."
Mr Emmerson suggested that short-term government borrowing could be appropriate, to help fund support for families struggling to make ends meet.
But he said "large, permanent tax cuts" would only exacerbate pressures on the public finances, and were "hard to square" with the candidates' promises to manage the nation's finances responsibly.
Warning on debt
Last month, the Office for Budget Responsibility warned that UK Government debt is already on an "unsustainable path" because of inflation and other factors.
The IFS's warning comes as consumer prices continue to soar, with inflation hitting 10.1% in July- a fresh 40-year high. Rising living costs are eating into household budgets, with inflation rising faster than wages.
Meanwhile, the Bank of England has warned high prices will push the UK into recession, with the economy forecast to shrink in the last three months of 2022 and keep shrinking until the end of 2023.
The IFS said it was concerned by Ms Truss and Mr Sunak's tax plans given the "deteriorating outlook".
Responding to the report, Mr Sunak's campaign said his tax plans were funded and that IFS research supported his approach.
A source for Ms Truss's campaign said she "would use an emergency budget to kick start her plan to get our economy growing and put more money into the pockets of hardworking people".