In April the government borrowed £7.2 billion to make ends meet, £600 million more than forecast, according to the Office for National Statistics.
The figures suggest the chancellor will struggle to hit his target of cutting the deficit for the year to next March 2017 by 23 per cent to £55.5 billion.
Lower tax payments from companies were the reason for the worse-than-expected figures, a sign that economic growth is sluggish at best.
Government income from corporation tax was £5.8 billion, a fall of more than 5 per cent on last year. Numerous economic surveys have lately showed that the economy is slowing ahead of the June 23 referendum on the country’s membership of the European Union.
The figures could have been even worse, had they not been boosted by the biggest ever take from stamp duty for one month of £1.3 billion. That came as buyers raced to get deals through ahead of a new surcharge on the purchase of property bought for rental and second homes in April.
Both the Treasury and Bank of England say the economy is suffering from uncertainty about the outcome of the referendum.
A Treasury spokesperson said: “Today’s figures show further progress in fixing the record post-war deficit we inherited: borrowing is falling and we have the lowest April monthly deficit since the great recession. But the fiscal repair job is not finished and it would be dangerous to put this at risk.
“As uncertainty ahead of the referendum weighs on our outlook, Treasury analysis has shown that if the UK votes to leave the EU on June 23, we would be tipped into a year-long recession and receipts could fall by £36 billion in the long term, unwinding years of hard work.”
Paul Hollingsworth of Capital Economics said this is a “poor start to the fiscal year”.
He added: “The disappointing tone of the latest UK public borrowing figures ended the recent short run of more upbeat economic data and indicated that the chancellor has started the fiscal year on the back foot.”
Alan Clarke at Scotiabank said: “The public finance data for April marked a disappointing start to financial year 2016-17. To hit the chancellor’s borrowing goal for this year we needed to see borrowing down by an average of £1.5 billion per month compared with the same month a year ago so we are running behind schedule already.”
PwC chief economist John Hawksworth said that reducing the budget deficit is likely to be a long, slow process. He said: “Nonetheless, the deficit has still come down gradually, thanks to a rise of around 3 per cent in central government receipts last year, while central government spending was broadly flat. But this was achieved partly by squeezing grants to local authorities, whose borrowing last year rose by £4 billion relative to the previous year.”
