Chancellor Gordon Brown says the British government will meet its fiscal rules and has challenged a research institute's prediction that he will soon have to put up taxes.

The Institute of Fiscal Studies, an independent think tank recently predicted that if the next economic cycle is declared beginning in 2006, it will start off with deficits and so taxes will have to rise by some £10 billion.

But when asked about that prediction, Mr Brown told BBC Radio yesterday that the IFS was wrong.

"What I can tell you is that they are wrong because we are meeting our fiscal rules. The implication of the IFS report is that the government here is not meeting its fiscal rules and that we will not meet them in future years," Mr Brown said.

"We will meet and continue to meet our fiscal rules and these suggestions that have been made by these different institutes have not been borne out by events," Mr Brown said.

The golden rule states that over the economic cycle taken as a whole the government may borrow only to invest. Brown will next update the outlook for the public finances in his pre-budget report, expected on December 2.

Mr Brown also suggested that the fiscal position in Britain with respect to pensions is better than its major European trading rivals.

While pension expenditure in France and Germany is some 10 per cent of national expenditure and will probably climb to 15 per cent over the next three or four decades, Mr Brown noted it was currently only five per cent in Britain.

"The fiscal position as far as pensions are concerned is one that is both sustainable in the short-term and sustainable in the long-term," Mr Brown said.