The UK budget deficit widened to the highest June level in four years on bigger government spending, the Office for National Statistics reported Friday.
Public sector net borrowing excluding public sector banks rose by GBP 3.8 billion from the previous year to GBP 7.2 billion, the highest June borrowing since 2015 and well above the expectations of GBP 3.9 billion.
Receipts grew only 1.5 percent annually, driven by higher income tax related revenue, while government expenditure increased 7.2 percent from last year.
The current financial year-to-date borrowing increased by GBP 4.5 billion to GBP 17.9 billion.
Of the GBP 17.9 billion borrowed by the public sector, GBP 11.6 billion was related to the cost of the "day-to-day" activities of the public sector, while GBP 6.4 billion was capital spending.
The ONS said the public sector net debt excluding public sector banks at the end of June, increased by GBP 27.0 billion to GBP 1.81 trillion or 83.1 percent of gross domestic product.
Data from the Office for Budget Responsibility on Thursday showed that borrowing will increase around GBP 30 billion a year from 2020-21 onwards in case of a no-deal Brexit.
The OBR cautioned that a more disruptive or disorderly scenario, closer to the stress test that was considered two years ago, could hit the public finances much harder.
The underlying deterioration in the fiscal position evident since the beginning of the financial year, providing a timely reminder that the new PM won't get a free "fiscal lunch", Ruth Gregory, an economist at Capital Economics, said.
The economist said "However, we doubt any of this will prevent the new PM from loosening fiscal policy. Just how far borrowing rises will depend on whether there is a deal or a no deal, or a delay."