This surge, driven by increased public sector wages and rising debt interest payments, raises concerns about potential future tax hikes.

The Office for National Statistics (ONS) reported that borrowing was £1.6bn higher than October last year. Increased departmental spending, particularly on public sector pay rises awarded after the Labour government took power in July, contributed significantly to the increase.

Economists warn that these figures present a challenge to the Chancellor’s fiscal plans. Despite significant spending measures announced in the recent Budget, further tax increases may be necessary to fund future spending commitments.

The Chancellor has maintained that no further tax rises or borrowing are planned, even if tax revenue falls short. However, experts suggest that economic growth will need to meet expectations to avoid the need for additional revenue-raising measures.

Matt Swannell, chief economic advisor to the EY ITEM Club, said: “Despite the changes announced at the Budget, fiscal policy will continue to tighten over the next few years. Moreover, the Chancellor has left herself little wiggle room against her own fiscal rules and may need to implement more tax rises in future years if the tax take disappoints or spending proves higher.

“Indeed, if the rise in market interest rates since the Budget is sustained, the Government would already have less headroom against its fiscal targets.”