Chancellor Rishi Sunak has said he is preparing a Budget that “provides support for people… through the remaining stages of this crisis”.
He said providing help as restrictions eased was “right” but added he wanted to “level with people” about the “shock to the economy” caused by Covid.
He dismissed claims he had told MPs he wanted to raise taxes now so he could cut them ahead of the next election.
This comes as the government announced £5bn to help high street businesses.
Meanwhile Labour’s shadow chancellor Anneliese Dodds accused the chancellor of being “focused on politics” over protecting the economy.
Mr Sunak told the BBC’s Andrew Marr the government had gone “big and early” when providing support to those hit by Covid in the early days of the pandemic – and added “there’s more to come”.
He said he was focused on providing support for people, businesses and families.
However he said he wanted to “be honest” with the public about the pandemic’s impact on the economy and “clear about what our plan to address that is”.
He warned high levels of borrowing had meant Britain was “more sensitive to interest rate changes” but wouldn’t confirm newspaper reports he was planning to freeze income tax thresholds or raise corporation tax in a bid to lower public debt.
Asked whether he had told Conservative MPs that he wanted to raise taxes now so he could cut them ahead of the next general election he replied “I don’t recognise that.”
Ms Dodds said the chancellor should “follow what is in the interest of our country” not “party politics”.
She said considering tax rises made the UK government “an outlier” compared with other countries.
And she called on the chancellor to confirm that the furlough scheme and £20 increase to Universal Credit would be kept for as long as Covid-based restrictions were in place.
Mr Sunak will lay out the government’s tax and spending plans in his Budget on Wednesday, at a time when public borrowing has led to the highest national debt level since 1963.
Conservative former chancellor Lord Ken Clarke argued Mr Sunak should consider raising VAT, national insurance and income taxes in order to repair the public finances.
However some Conservative MPs – including ex-Brexit Secretary David Davis – have warned against such rises and potential Tory rebels have been told they risk being kicked out of the parliamentary party if they vote against the Budget.