Borrowing blow to Osborne plan

THE Government is borrowing more than it was a year ago in a blow to George Osborne’s plans to shore up Britain’s battered public finances.

Official figures showed the state borrowed £13.3bn last month compared with £12.6bn in May last year as it continued to live beyond its means.

The borrowing binge takes the shortfall in the public finances to £24.2bn in the first two months of the fiscal year – £1.9bn or 8.5pc more than in the same period last year.

The national debt hit £1.28trillion last month – or more than £51,000 per household and 76.1pc of gross domestic product.

The figures are a setback for the Chancellor and suggest that the economic recovery has so far failed to translate into higher tax revenues with income tax receipts particularly disappointing.

Osborne, pictured, used his Budget in March to outline plans to reduce the deficit from £107bn last year to £95.5bn this year. It hit a record £157bn under Labour in 2009-10.

Samuel Tombs, senior UK economist at Capital Economics, said the latest figures ‘contain tentative signs that the Coalition may be beginning to struggle to bring down the deficit in line with the fiscal plans’.

He said: ‘The real concern lies not in Government spending. Rather tax receipts have continued to grow disappointingly weakly. ‘So while the economic recovery may now be fairly strong, it still appears to be struggling to have much of an impact on the borrowing numbers.’