An extra £2.9 billion contribution to the European Commission budget has delivered a blow to George Osborne’s hopes of cutting the deficit as it pushed up public sector borrowing in December.
Official figures showed a shortfall - excluding the effect of bank bail-outs - of £13.1bn for the month, up from £10.3bn a year before.
The difference was entirely accounted for by the UK’s higher European contribution, recalculated because the economy was performing better than had been thought.
This will be partially made up for by a refund and rebate totalling £2bn, not likely to be recorded in the public finances until the next fiscal year.
But it means borrowing for the April-to-December fiscal year to date is now, at £86.3bn, just 0.1 per cent lower than in 2013/14.
That compares with the independent Office for Budget Responsibility (OBR) forecast of a six per cent fall in the annual deficit for the year to March. It was revised down last month from a tougher target of 11 per cent.
There was better news from income tax and capital gains tax receipts, which saw their best December performance in four years, climbing by 3.1 per cent to £12.6bn on the year.
Income tax revenues have caused a headache in recent months as they have not been growing as much as expected despite the upturn in growth and record job numbers.
The year-to-date borrowing figure was boosted by a £2.5bn downward revision, partly due to a £900m upward revision in income tax receipts so far in 2014/15.
VAT revenues for the year to date were also marked up, by £700m.
Underlying net debt was £1.483 trillion - 80.9 per cent of gross domestic product, a record figure.
Samuel Tombs of Capital Economics said: “December’s UK public finance figures show that the pace of deficit reduction remains disappointingly slow in light of the economy’s recent strength.
“In order to meet the OBR’s forecast made only a month ago for a six per cent reduction in borrowing this year, the deficit will have to be a hefty £6bn,or 54 per cent lower, in the remaining three months of this fiscal year than it was last year.”