Government debt reaches 99.2pc of GDP as borrowing hits February record

Chancellor Jeremy Hunt said: “Borrowing is still high because we’re determined to support households and businesses with rising prices and are spending about £1,500 per household to pay just under half of people’s energy bills this winter.

“What will bring these costs right down is lower inflation, which is why it remains one of our top priorities to halve it this year, alongside growing our economy and reducing debt.”

Despite coming in higher than expected, the level of borrowing points to more rather than less headroom for the Chancellor according to Ruth Gregory of Capital Economics.

She highlighted that total tax receipts were up £5bn from last year, while self-assessed tax receipts were £24.5bn in January and February, the highest two-month equivalent since records began in 1999.

It means that with only one month left of the fiscal year, cumulative borrowing is at £132.2bn, far below the full-year deficit of £152.4bn predicted by the Office for Budget Responsibility last week.

Ms Gregory said: “The Chancellor might therefore have a bit of money to play with in the fiscal event in the autumn.”

“But the big risk is that the turmoil in the banking sector deepens the economic downturn and the recent improvement in the public finances is blown away.”

While borrowing was high by historical standards in February, it was significantly smaller than the £27.4bn borrowed in December.