Government borrowing reached £16.1bn in August, the highest total on record for the month, as receipts from income tax plunged 13 per cent year on year.

Public sector net borrowing was 62 per cent higher than the £9.9bn required last August before the full weight of the financial crisis and recession struck, although it was slightly less than some economists had forecast. In the 12 months to the end of August, borrowing was £127bn – nearly three times higher than the same period a year earlier, when the deficit was £45bn.