A fall in tax payments by consumers and companies last month sparked new warnings to Alistair Darling yesterday over the worsening state of the public finances.

Cash revenue from value-added tax last month fell 3 per cent compared with the same period last year and payments of corporation tax dropped nearly 7 per cent from their levels a year ago, official figures showed. After a surprise boost that allowed the Treasury to take in bumper amounts of tax receipts in January, economists said that the Chancellor remained on track to meet his revised £36.4 billion forecast for government borrowing in the full 2007-08 financial year.

But yesterday's signs of a worsening trend in key sources of tax revenue led economists to once again warn Mr Darling that his increased forecast for borrowing of a hefty £43 billion is still likely to prove too rosy.

Economists believe that VAT and corporation tax revenues are likely to prove vulnerable if the downturn in the economy gathers pace, with VAT receipts hit by a consumer slowdown, and weakening corporate profits taking a toll on companies' contributions to government finances.

Yesterday's figures showed public sector net borrowing of £2.7 billion in February, leaving the Treasury deeper in the red than in the same month last year, when it recorded a £2.5 billion deficit. Over the first 11 months of the 2007-08 financial year, net borrowing was £27.8 billion - £4.8 billion more than in the same period in 2006-07. Revenue growth over the first 11 months of the financial year continued to fall a little short of the Budget forecasts, with receipts up 5.4 per cent, compared with the Chancellor's projections for a 5.8 per cent full-year gain.

The Institute for Fiscal Studies said that the Treasury could also come under increased financial stress should share prices continue their recent slide. It noted that if the 4 per cent drop in share prices over the past week had taken place before the Budget, Mr Darling would have had to reduce expected tax revenues by a further £500 million a year.

Gemma Tetlow, an IFS economist said: “To the extent that these figures were taken into account by the Treasury in drawing up its Budget forecasts, they do not cast doubt on the Treasury's forecasts for this year.”

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