Public sector pay deals pushed Government borrowing higher than expected in the run-up to the Budget, official figures show.

The Treasury borrowed £17.4bn in October, according to the Office for National Statistics (ONS), which was well ahead of analyst forecasts for £13.3bn.

Public sector net borrowing, excluding banks, was the second highest for any October on record, as government expenditure surged to £88.5bn.

Spending was £3.9bn higher than last year, as public sector pay rises helped drive a £2.5bn jump in departmental spending on goods and services to £36.9bn.

The ONS data shows the Treasury was borrowing more than expected before the Chancellor adjusted the UK’s debt rules in the Budget to allow her to increase public spending.

Government spending is now on course to rise by about £70bn a year, or 2pc of GDP, over the next five years, funded partly by tax rises but also by some £28bn of extra borrowing.

The ONS said public sector net debt excluding public sector banks reached around 97.5pc of the UK’s annual gross domestic product (GDP).

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