Government borrowing rose to £18.3 billion in August, roughly 20% higher than in the same month last year and above official forecasts. The figures deepen pressure on the Chancellor, as spending outpaced government income and ministers prepare for possible further economic effects from rising Middle Eastern energy prices.

Although borrowing for the financial year so far remains below the level recorded over the same period last year, it has exceeded expectations because central government borrowed more than anticipated. Inflation contributed to higher spending, while debt-interest costs reached a record August high; the Opposition accused Labour of losing control of the public finances, while the Treasury said fiscal discipline and adherence to its rules remained essential.