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UK government borrowing rose by more than expected last month following a big increase in debt interest payments.
Borrowing - the difference between public spending and tax income - was £20.7bn in June, up £6.6bn from the same month last year, the Office for National Statistics (ONS) said.
The UK statistics body said higher spending on public services and debt interest payments outstripped revenue from other taxes including National Insurance which was lifted in April.
The larger-than-forecast figure is likely to fuel speculation about tax rises in the forthcoming Budget after the government was forced to reverse its cuts to benefits that had been aimed at saving billions of pounds.
The latest borrowing figure was the second-highest June figure since monthly records began in 1993, the ONS added, behind only June 2020, which was heavily affected by the pandemic.
Dennis Tatarkov, senior economist at KPMG UK, said the data "piles more pressure on public finances".
"Furthermore, the longer-term outlook for public finances remains difficult. Recent U-turns on welfare and persistent growth headwinds could open a gap against fiscal targets, which could require further tax rises or spending cuts in the Autumn Budget."
The ONS said interest payments on government debt rose to £16.4bn in June 2025, which was nearly double the amount paid at the same point last year.
The increase is due to a pick up in the rate of inflation, with interest payments on some government debt linked to the Retail Prices Index measure of inflation.
Alex Kerr, UK economist at Capital Economics, said income tax revenue had been lower than expected "which suggests that the recent weakness in the labour market is weighing on receipts", and this could continue "with underlying economic growth still weak".
The most recent growth figures have shown that the UK's economy contracted in both April and May.
Mr Kerr said Chancellor Rachel Reeves will probably need to raise £15bn-£25bn at the Budget in the autumn to keep her on track to meet her fiscal rules.
"Given that she is struggling to stick to existing spending plans and we doubt the gilt market will tolerate significant increases in borrowing, she will probably have to raise taxes instead."
Borrowing in the first three months of the current financial year has now reached £57.8bn, an increase of £7.5bn from the same period in 2024.
Although £57.8bn is in line with what the Office for Budgetary Responsibility, the official independent forecaster, had predicted.
Darren Jones, Chief Secretary to the Treasury, said: "We are committed to tough fiscal rules, so we do not borrow for day-to-day spending and get debt down as a share of our economy."
Shadow chancellor Mel Stride said: "Rachel Reeves is spending money she doesn't have. Debt interest already costs taxpayers £100bn a year - almost double the defence budget."
