UK public borrowing more than expected in July

The UK government borrowed more than expected in July, traditionally a good month for tax receipts, the Office for National Statistics said.

Net borrowing was £600m in July, an increase of £3.4bn on the same month in 2011 when it repaid £2.8bn.

The Treasury blamed disappointing corporation tax receipts, especially from North Sea oil production.

Some analysts suggest the government may now miss official forecasts for total borrowing this year.

So far this year, public sector net borrowing - excluding banking interventions and the one-off boost earlier in the year from a transfer of Royal Mail pension assets to the public sector - was £44.9bn, up from £35.6bn from the same period in 2011.

The Office for Budget Responsibility, the official UK economic forecaster, predicted that borrowing on the same measure would be £119m for the whole of the financial year.

With the recovery falling well short of the OBR's expectations, we think that the government will struggle to cut borrowing at all next year either”

The figures will open up the debate on whether the government is doing enough to cut the UK's deficit, the amount it spends more than it gets in.

"We're going backwards not forwards," said economist Alan Clarke of Scotia Bank.

"It's going to increase pressure on the government to get back on track either by tightening fiscal policy further to make up for the lost ground, or loosening policy in the hope that stronger economic growth improves the public finances."

A Treasury spokesman said: "The government remains committed to the credible plan we have set out to deal with Britain's debts."

July is usually a good month for tax receipts, meaning the government normally makes a surplus, because it is the month that businesses make quarterly corporation tax payments and individuals' tax self-assessment returns are recorded.

But some said this month's figures should be treated with caution as corporation tax receipts are affected by the temporary closure of the Elgin gas field due to a leak.

The ONS also warned that the timing of self-assessment returns - which are recorded in August as well as July - makes direct comparisons between years difficult. More returns that usual may be recorded in August, as the deadline is the last day of July.

The previous months borrowing figures had also been worse than expected.

"It's the same story we've been seeing since the beginning of the year, that tax receipts are down, which is not surprising given the weaker growth performance of the economy," said Gustavo Bagattini from RBC Capital Markets.

Tom Vosa, an analyst at National Australia Bank, said although the monthly numbers were "terrible", "the trend so far isn't disastrous".

"Unless we see a further fall in revenue, the government could possibly still have a small undershoot for the fiscal year as a whole."

Vicky Redwood, from Capital Economics, expects the government to overshoot this year's target.

"And with the recovery falling well short of the OBR's expectations, we think that the government will struggle to cut borrowing at all next year either," she added.

The Office for National Statistics said net debt - the sum of all borrowing - was now£1.032bn, or 65.7% of GDP.

The ONS also revised the figure for how much the UK borrowed in the 2011-12 financial year to £125bn. The OBR had forecast £126bn.