Chancellor John Healey's room for manoeuvre has narrowed weeks before his first Budget, after Britain borrowed far more than forecast in August.
The Office for National Statistics said public borrowing hit £18.3 billion last month, about £3.5 billion above the prediction of the Office for Budget Responsibility, the government's fiscal watchdog.
That overshoot, driven partly by inflation pushing up spending, adds to the pressure on Healey and the prime minister, Andy Burnham, as the 28 October Budget approaches.
Borrowing to fund day-to-day spending has now reached £51.9 billion so far this financial year, again above the watchdog's forecast.
Debt interest payments climbed to £8.8 billion, further squeezing the public finances, though total debt stayed below the £3 trillion mark.
Economists warned the figures leave the Chancellor boxed in, with borrowing £8.1 billion higher than the OBR expected five months into the year.
Ruth Gregory of Capital Economics called the picture "dismal" and said she expected Healey to rebuild his fiscal buffer by up to £14 billion through tax rises or spending cuts.
Higher gilt yields, pushed up by the energy shock from the Iran war, have already eaten into the Chancellor's headroom, at one point by as much as £9 billion.
Healey must also find money for household energy support while lifting defence spending to 3% of GDP by 2030.
The shadow chancellor, Andrew Griffith, said it took "rare fiscal incontinence" to post record tax receipts yet still see borrowing rise.
