Chancellor George Osborne has remained on track to meet his annual borrowing target, despite figures today showing a bigger than expected rise last month.
Public sector net borrowing, excluding financial interventions such as bank bailouts, was £14 billion in June, compared with £13.6 billion the same month the previous year, the Office for National Statistics revealed.
This was higher than economists' expectations for a rise of £12.5 billion. The larger than expected figure was due to a slight drop in income taxes, largely as a result of tax rebates.
However, there was some good news for the Chancellor as in the financial year to date the Government has borrowed slightly less than the previous year.
The Government has a target of reducing borrowing to £122 billion in the current financial year from £143.2 billion the previous year.
It had been thought that the Government had borrowed more this year than last year, but figures for April and May were revised downwards by £1.4 billion by the ONS today.
Interest payments on the Government's debt rose by 6% to £4.1 billion and helped push overall expenditure up by 4.9% to £52 billion, despite the austerity measures which are increasingly kicking in.
The Government borrowed £39.2 billion in the first three months of its financial year, down on £39.5 billion in the same period of the previous year.
The latest borrowing figures have pushed the UK's state debt up to £944.3 billion, equivalent to 61.9% of GDP.
James Knightley, an economist at ING, said the marginal improvement so far this year reflects the fact that while tax revenues are up, "Government spending is not contracting in a significant way".
He added: "This is in no small part due to a rise in interest expenses given the UK's deepening debt position - 20% of UK debt is inflation linked and rising inflation has been pushing up the servicing costs on this debt."