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Government borrowing rises by a fifth to £18bn in August

Tom EspinerBusiness reporter
News imageBloomberg via Getty Images A commuter carries his jacket on a sunny day in the City of LondonBloomberg via Getty Images
Borrowing was higher than expected as inflation eats into government Budget headroom

The government borrowed more than expected in August, as persistently higher inflation pushed up overall spending.

Borrowing - the difference between tax receipts and government spending - was £18.3bn in August, almost a fifth higher than the year before, the Office for National Statistics (ONS) said.

It means the government is borrowing more than official forecasters expected, piling pressure on Chancellor John Healey as he prepares to deliver his first Budget on 28 October.

Inflation rose to its highest rate in five months in August in the UK, driven up by higher petrol and diesel prices.