Britain's budget deficit reached £9.3bn in November, the second-highest figure since records began in 1993, the Office for National Statistics (ONS) said yesterday.
Public sector borrowing of £9.28bn last month was up 8.6 per cent on November 2004, adding to the pressure on Gordon Brown to cut spending or raise taxes in the new year.
The figures follow Mr Brown's pre-Budget report, published two weeks ago, in which the Chancellor warned he would need to borrow more than expected over the next five years.
Yesterday's update suggests Mr Brown is just about on track to hit his revised forecast of £37bn of borrowing for the 2005-06 financial year, though economists said his margin for error was shrinking.
Jonathan Loynes, an economist at Capital Economics, said: "It would be no surprise if borrowing were to pick up later in the year as tax receipts slow in response to the downturn in the economy." The ONS said that while tax revenues were 4.1 per cent higher in November than in the same month last year, public spending was up by 6.5 per cent.
Mark Pragnell, the managing director of the Centre for Economic and Business Research, said: "One shouldn't read too much into a single month's figures, but it looks as if Gordon's Christmas present to the British economy is rising public sector current spending which is outstripping tax receipts."
However, the Government was buoyed by further evidence that the housing market may be recovering more quickly than expected, supporting consumer confidence.
The Council of Mortgage Lenders said gross lending rose 5 per cent in November to £28.5bn, bucking expectations that the mortgage market would slow in the run-up to Christmas.
Although the lending figures include remortgaging business and loans for house purchases, the CML said confidence was returning among buyers. The director general of the CML, Michael Coogan, said: "The housing and mortgage markets have strengthened significantly from the lows of a year ago."
The Royal Institution of Chartered Surveyors said it believed house prices had begun to rise for the first time in 15 months. Over the three months to November, 4 per cent more surveyors reported house price gains than falls, compared with a negative balance of 8 per cent in the previous three months.Reuse content