UK borrowing surge piles pressure on chancellor ahead of Budget

UK borrowing adds to Budget headache

If you wonder what 'borrowing' means: It is the difference between tax receivables and government expenses, meaning the government has a deficit of £18.3 billion.

The figure, published by the Office for National Statistics, was £3.5bn higher than official forecasters had expected.

Persistently high inflation, driven up by rising petrol and diesel prices, pushed government spending on public services and benefits up faster than tax receipts could keep pace.

The interest bill on the government's debt rose to £8.8bn in August, its highest level for the month since records began in 1997, as the Treasury faces growing demands to spend more on defence and cost-of-living support.

Martin Beck, chief economist at WPI Strategy, warned against reading too much into one month of data but said there were "concerning elements", including that the cost of servicing government debt "is likely to rise in the coming months".

The Institute for Fiscal Studies said debt interest is now "a worryingly large share of overall government spending" and has been pushed up since the last official forecasts.

Research economist Nick Ridpath said "both higher borrowing costs and higher inflation make life harder for a chancellor who is looking to bring down borrowing and to spend more on government priorities."

It's not the only pressure on Whitehall budgets this autumn: the funding crisis already squeezing other government budgets forced the Army to cancel a string of training exercises last month, while opposition tax-cut plans have added to the debate over how any shortfall would be filled.