Borrowing already 20% higher than Brown forecast in Budget

Public borrowing has already plunged almost 20 per cent deeper into the red than the Chancellor, Gordon Brown, forecast just two weeks ago.

In a highly embarrassing admission, the Treasury said the deficit for the financial year to March had come in at £13.8bn, more than £2bn worse than the £11.7bn predicted in the Budget on 9 April.

Opposition politicians seized on the figures, saying they showed Mr Brown had been wildly optimistic in the Budget when he forecast modest deficits and strong economic growth over the coming five years.

Matthew Taylor, the Liberal Democrat spokesman, said it highlighted the need for an independent assessment of the figures in the Budget. "Without an independent audit and on current evidence, how can Britain believe your Budget predictions, Mr Brown?" he asked.

Mark Prisk, the shadow Financial Secretary, said: "The Chancellor has already had to downgrade his forecasts twice in less than five months. He said: "With independent economists being more cautious than the Chancellor about prospects for the coming years, these figures raise further questions about Gordon Brown's credibility."

Mr Brown was criticised after the Budget for forecasting that the economy would enjoy a strong recovery in 2004 and 2005.

The higher borrowing figures triggered fresh fears that the Chancellor will have to increase taxes again to fill a so-called "black hole" in public finances.

The Institute for Fiscal Studies (IFS), an independent think-tank, believes tax increases of £11bn are needed to cover the long-term shortfall.

Carl Emmerson, a senior analyst, said: "Whether further tax increases will be required to pay for the increases in spending will depend on whether receipts recover in the medium term, as the Treasury expects, or whether growth is less strong, as forecast by the IFS."

Yesterday's figures showed total tax receipts had grown just 0.4 per cent over the year, thanks to a 9 per cent slump in corporation tax receipts and a 0.1 per cent fall in income tax.

Revenues have been hit by the fall in stock markets, which has cut corporate profits and workers' bonuses in the City of London, the engine room of the UK economy.

But the Treasury dismissed claims that the new figures undermined its forecasts, saying the shortfall was due to statistical errors that would soon be revised away.

It said that while revenues were in line with forecasts, the shortfall was driven by a sudden surge in spending last month.

A spokesman said that Whitehall departments had produced end-of-year spending estimates that the Treasury believed were "not particularly robust".

"Our view is that these numbers will be revised downwards," he said. "As far as we are concerned, the figures we published for 2002-03 remain our best view as to what they will turn out to be."