Jump in borrowing deals blow to George Osborne - Telegraph.co.uk

Corporation tax has been largely to blame for the shortfall, while VAT has also brought in less than hoped. Only employment taxes have got close to their target. About three-quarters of the corporation tax shortfall has been due to low levels of North Sea oil production, where there have been major outages for maintenance work.

Deeper-than-expected spending cuts have offset some of the weakness in tax receipts by coming in lower than forecast. In the first seven months of the year, spending has risen just 2.3pc, against the OBR's forecast of 3pc.

A Treasury spokesman said: "The economy is healing, but it still faces many challenges. These numbers illustrate that, but also show the Government's plans to bring spending under control are on track for the year."

The OBR forecast in March that borrowing this year would fall from £126bn to £122bn, but the IFS now reckons it will rise to £135bn or even £139bn if spending does rise in line with the original plan.

Economists fear that the Chancellor will try to meet his debt target by imposing more austerity measures on the country in the Autumn Statement on December 5.

"Even if the OBR assumes that the trend improves a bit, it will still be pretty touch and go whether the Chancellor will be expected to meet his fiscal rules without increasing his austerity measures further," Vicky Redwood, chief UK economist at Capital Economics, said.

Mr Tinsley said Mr Osborne should instead "take the weakening in borrowing on the chin and emphasise that medium-term spending restraint appears to be working".