The Government's finances deteriorated in May, with public sector net borrowing spiralling to £11 billion, the second highest monthly deficit since records began in 1993 and up from £1.7 billion in April.

The public sector net cash requirement also spiralled to £11 billion, the highest ever May requirement since since the series began in 1984.

The public sector net debt, which should not exceed 40 per cent of GDP if the Government is to meet its own sustainable investment rule, rose to 37.2 per cent of GDP, up from 36.5 per cent at end of May last year.

Including Northern Rock's debt, net borrowing would spiral to 43.2 per cent. However, the Government does not include the bank's debt in its public sector net borrowing figures despite Northern Rock being nationalised this year to save it from collapsing.

Analysts expect the finances to deteriorate further in coming months as the slowing economy depresses the Government's revenues from tax and VAT. The slowing housing market will also hit stamp duty receipts. The bigger tax take from soaring oil prices will lessen the blow slightly however.

Howard Archer, of Global Insight, the economic consultancy, said that these figures would reinforce the belief that the Chancellor would miss his fiscal targets this year by a substantial margin.

But he says the looming general election in 2010 is likely to deter the Government from raising taxes to try and boost their coffers.

Explore Economics

• Pre-Budget Report 2009

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive