Borrowing surge puts pressure on chancellor ahead of Budget

Share Save Add as preferred on Google Tom Espiner Business reporter Getty Images An unexpected surge in government borrowing in August, driven by persistently higher inflation, has added to pressure on Chancellor John Healey as he prepares to deliver his first Budget at the end of October.

Borrowing - the difference between tax receipts and government spending - was £18.3bn in August, almost a fifth higher than the year before, the Office for National Statistics (ONS) said.

That figure was £3.5bn more than official forecasters expected.

Inflation rose to its highest rate in five months in August in the UK, driven up by higher petrol and diesel prices.

Although tax receipts were higher in August compared with a year ago, spending on public services, benefits, and other costs grew more as the pace of price rises increased.