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    Public Sector Borrowing Up In May

    Britain borrowed more than expected in May as the recession damaged tax receipts to the Treasury and the Government spent more money.

    Public sector net borrowing, excluding financial interventions, came in at £17.94bn, according to the Office for National Statistics(ONS).

    Analysts had expected a figure of around £15bn and the unexpected rise makes the deficit reduction target for the 12 months to April more difficult to achieve.

    The sum was also almost £3bn more than the Government borrowed in the same month last year.

    A rise in total Government spending of almost 8% on the year in May and fall in income tax receipts of 7.3% were to blame, the ONS said.

    It added that welfare benefit payments increased by 11.7% which largely drove the total rise in spending.  

    Only yesterday, David Cameron outlined Tory plans to end a 'culture of entitlement' to benefits.

    The news was announced as Labour called on ministers to help boost economic recovery by suspending August's planned rise in fuel duty of 3p-a-litre - sparking a bitter political debate over taxation.

    The ONS said May's borrowing figure was flattered by a one-off transfer of assets from the Royal Mail pension fund to the Treasury in April.

    Without this effect, the ONS said the figure would have been £28.4bn in April and May combined.

    The body also revised upwards Government borrowing for the last financial year to £127.6bn from £124.4bn.

    Private sector forecasts released by the Treasury last week suggest the Government will miss its budget deficit target by £3bn in this current fiscal year.

    The overshoot contained in those predictions rises to £7bn for the following financial year - given the slowdown in forecasts for economic growth.

    A spokesman for the Treasury said: "It is too early in the financial year to draw conclusions about the year as a whole, especially as today's public finances data include a number of one-off factors and temporary distortions."

    He continued: "The Government is committed to dealing with the deficit, which will help keep interest rates lower for longer and support millions of families and businesses across the country."

    Sky's business correspondent Alistair Bunkall said: "The net figure of £17.9bn is not only bigger than a it was a year ago but is also bigger than most analysts predicted.

    "However, we shouldn't put too much emphasis on a single figure but this does add yet more weight to Labour's argument that the government's economic policy isn't working."

    Writing in The Sun newspaper, shadow Chancellor Ed Balls called on George Osborne to help hard-pressed firms and families by suspending the next fuel duty increase.

    He argued it would be paid for out of the £500m underspend for the Olympics.

    Labour planned to table an amendment to a vote on the Budget, due in the Commons next week.