UK Government borrowing rose in August to the second-highest level for the month on record, coming in above forecasts and piling pressure on Chancellor John Healey ahead of his first autumn Budget, figures show.

Public sector net borrowing rose to £18.3 billion in August, which was £3.5 billion more than what official Government forecasters had been expecting, the Office for National Statistics (ONS) said.

The figure was £2.9 billion, or 19%, more than the same month last year and marked the second-highest August borrowing on record, behind that of 2020.

The ONS said the jump was driven by spending increasing more than the Government was generating from taxes and other receipts.

This partly reflected inflation-related costs and spending on the state pension and other benefits.

Furthermore, the amount that central Government paid in interest on its debts was £8.8 billion in August, marking the highest figure for the month since records began.

This was a partly a result of higher inflation pushing up the interest payable on Retail Prices Index (RPI)-linked Government bonds, known as gilts, which is making the costs more volatile.

Rising debt interest costs are set to create challenges for Mr Healey whose fiscal headroom remains stretched, a month away from him delivering his first autumn Budget statement in October.

Emma Reynolds, the Chief Secretary to the Treasury, said: “Britain has huge potential to deliver good growth in every postcode, creating jobs, raising living standards and investing in the services people rely on.

“But we can only deliver that growth with fiscal discipline.

“At a time when debt interest costs billions of pounds that could otherwise be spent on improving lives, we must always know where the money is coming from to pay for public services.

“That is why we are committed to meeting our fiscal rules with a buffer against uncertainty, taking the tough decisions needed to keep the public finances on a sustainable path.”