Public borrowing hit a record £19.9 billion in May as the recession continues to take its toll, official figures revealed yesterday morning.

May's borrowing was nearly double the £10.6 billion borrowed in April. Public sector net borrowing for this financial year is now £30.5 billion — more than twice the level seen at the same stage 12 months earlier.

Even though May is traditionally a weaker month for public finances, borrowing over the month is the biggest figure since the Office for National Statistics’ (ONS) records began in 1993.

"Tax revenues continued to be decimated across the board by contracting economic activity, declining corporate profitability, elevated and rising unemployment, markedly reduced bonus payments, the VAT cut, and low housing market activity and prices," Howard Archer, chief European and UK economist at IHS Global Insight, said.

Public sector net debt reached £774.8 billion last month, equivalent to 54.7 per cent of gross domestic product (GDP), far exceeding Labour's now defunct fiscal rules which said that debt would never exceed 40 per cent of GDP.

The number of people claiming unemployment benefits has risen by more than 80 per cent over the last year as companies cut jobs in the face of the sharp economic slowdown.

Alan Clarke, UK economist at BNP Paribas, said: "May's UK public finances were every bit as dire as we have been bracing for. To put the borrowing figure in context, a few years ago, £19.9 billion would represent half of the borrowing requirement for the entire year — and now we are achieving this in a single month."

The chancellor of the exchequer, Alistair Darling, has forecast that borrowing will reach £175 billion this year as tax revenues dwindle and spending on benefits soars.

"Mr Darling clearly has a major battle in limiting the PSNBR to £175 billion in 2009/10, although current signs that the economy could be at least temporarily stabilizing gives him hope. Whether or not he does hit his targets for this year, it is evident that further major fiscal tightening measures will be needed to get the public finances back to a sustainable state over the long term," Dr Archer said.

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