The budget deficit widened to the biggest on record for any August last month as corporation tax receipts fell and benefit payments rose, data showed on Friday, casting further doubt over the government's chances of meeting its debt reduction goals.
Public sector net borrowing excluding financial sector interventions -- the government's preferred measure -- rose last month to 14.410 billion pounds from 14.365 billion in August 2011, the Office for National Statistics said.
That was the highest for any August since records began in January 1993, but below economists' forecast in a Reuters poll for 15.0 billion pounds.
It took borrowing in the fiscal year to date to 31.003 billion pounds, down from 48.446 billion in the April-August period 2011.
However, stripping out the transfer of Royal Mail pension assets, the deficit stood at 59.0 billion pounds, up 21.8 percent compared to April-August 2011.
The government had originally planned to eliminate the structural budget deficit by 2015 with a tough programme of spending cuts and tax rises.
But a weak economy has forced it to extend austerity by another two years and Prime Minister David Cameron has warned austerity could last even longer -- until 2020.
And finance minister George Osborne may soon face a tough choice between imposing more cuts or giving up on his goal of ensuring that the Britain's debt-to-GDP ratio starts falling by 2015.
At the same time, he is under pressure to loosen the austerity drive as Britain's economy is struggling to move out of recession and a meaningful recovery looks elusive.
Friday's data showed that government receipts rose 1.8 percent on the year in August, while current spending grew 2.5 percent.
The ONS said that corporation taxes fell 2.1 percent on the year in August, while benefit payments rose 4.9 percent.
(Reporting by Sven Egenter and Olesya Dmitracova)