Borrowing 14.5 bln pounds in June vs Reuters poll 11.5 bln
Borrowing 2.9 bln pounds more than OBR forecast
New government has ruled out major tax increases
Net debt 99.5 of GDP, highest since early 1960s

LONDON, July 19 Reuters Britain39;s government borrowed a lot more than forecast in June, according to official data published on Friday that highlighted the big budget challenges facing the new government of Prime Minister Keir Starmer.

Public sector net borrowing, excluding statecontrolled banks, was a largerthanexpected 14.5 billion pounds 18.75 billion last month. A Reuters poll of economists had pointed to an increase of 11.5 billion pounds.

Dennis Tatarkov, Senior Economist at KPMG UK, said the data showed the daunting task for the new government to fund its agenda without worsening the public finances.

A combination of high levels of spending and weak growth prospects will present uncomfortable choices deciding between even more borrowing or substantially raising taxes if spending levels are to be maintained, he said.

New finance minister Rachel Reeves is likely to announce her first budget after parliament39;s summer recess. She and Starmer have ruled out increases in the rates of income tax, corporation tax and valueadded tax, leaving her little room for manoeuvre to improve public services and boost investment.

Reeves has ordered an immediate review of the new government39;s spending inheritance, a move that lawmakers from the opposition…