Public sector borrowing in Britain for the last financial year was the highest in almost a decade at £34.8 billion, it was announced today.
The deficit - the biggest since £43.2 billion in 1994/95 - followed lower than expected tax receipts and continued high levels of Government spending.
Despite being £12 billion higher than a year earlier, Chancellor Gordon Brown saw the figure come in below his Budget forecast of £37.5 billion.
The better-than-expected performance is likely to give Mr Brown room to manoeuvre as he attempts to meet his golden rule of balancing his budget over the economic cycle, which is likely to be the seven years to 2005/06.
Borrowing in the current financial year is forecast in the City to be around £34 billion, although analysts believe higher tax receipts from the economic recovery could yet improve the result.
The annual performance for the last financial year was completed with borrowing of £6.2 billion in March, slightly better than market hopes.