A slump in tax receipts caused by the recession has driven the Government’s finances farther into the red than at any time for 15 years.

Official figures confirmed mounting strains on the Treasury, with Alistair Darling forced to borrow £67.2 billion in the first ten months of this financial year. This was almost three times as much as the same period last year.

The news was followed by warnings from the City that the Chancellor’s full-year forecast for public borrowing of £78 billion would prove to be far from accurate. Economists said that the figure for this year could rise to £100 billion, with borrowing set to surge still higher in 2009-10.

The Chancellor has already pencilled in borrowing of £118 billion for next year — equivalent to 8 per cent of gross domestic product and the highest since at least the early Sixties. Under the Conservatives the previous peak in public borrowing during recent decades was at 7.7 per cent of GDP in 1993-94, in the aftermath of the recession of the early Nineties.

Economists said yesterday that the Government could plunge into the red next year by as much as £200 billion as the worst recession of the postwar period undercuts the flow of taxes into the Treasury and as the cost of benefits for ever-higher numbers of unemployed people increases.

Borrowing may also be driven even higher — raising the prospect of sharp increases in taxes — if Gordon Brown and Mr Darling opt for a further stimulus of tax cuts and increased spending, following the strategy of President Obama. There were warnings from the City, however, that the Government’s scope for such moves might be constrained.

“The dreadful and deteriorating state of the public finances clearly places a limit on the size of any further fiscal stimulus and underlines the need for a major fiscal consolidation \ at some point in the future,” Jonathan Loynes, of Capital Economics, a leading consultancy, said.

The effect of the recession on the Treasury was emphasised by detailed figures confirming that tax payments made by individuals and businesses were being curtailed severely.

The Chancellor’s slice of consumer spending, from VAT payments, is particularly affected as Britons abandon their high-spending habits. Payments of VAT from shops and other businesses tumbled by more than a tenth last month compared with a year ago. In the past three months VAT receipts have slumped by 14.5 per cent compared with the same period a year ago. The Treasury has factored in only a 0.4 per cent fall for the second half of the financial year to April. Corporation tax payments in both January and the past three months taken together were down by almost a quarter compared with a year earlier.

Fears over the state of the Government’s books are being increased by the Treasury having to take on the debts and liabilities of the nationalised and part-nationalised banks. That is likely to add up to £1.5 trillion to the national debt.

The Office for National Statistics confirmed that the debts of Lloyds Banking Group, which includes the merged Halifax Bank of Scotland, as well as Royal Bank of Scotland and Bradford & Bingley, will now have to be counted into the national debt.

That is set to push the national debt up by between 70 per cent and 100 percentage points of GDP. The debts of Northern Rock and B&B have already helped to push national debt to 47.8 per cent of GDP.

Economists back the Treasury’s view that this exaggerates the taxpayer’s exposure since under official accounting rules few of the nationalised banks’ assets can be be counted in the Government’s books, although many of these remain sound.

Opposition parties seized on the figures, with the Conservatives warning that they were “just the beginning of Gordon Brown’s debt crisis”. Philip Hammond, shadow Chief Secretary to the Treasury, said that the jump in the national debt was “adding to the risks facing the economy and the burden on future generations”.

Sir John Gieve, the Deputy Governor of the Bank of England, said yesterday that the Monetary Policy Committee was grappling with the issue of how close to zero — either 1 or 0.5 per cent — interest rates should go. Asked about the prospects for increasing the growth of money supply, he said: “I expect that to happen in the coming weeks.”

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