Britain's public sector deficit expanded by almost £2 billion in March, the government has said.
Official figures show the overspend on the Treasury's current budget was £8.5 billion last month, compared to the £6.6 billion recorded in the corresponding month last year.
But the Office for National Statistics (ONS) data reveals that chancellor Gordon Brown is still in line with his £35 billion net borrowing target for 2006/07 overall.
The ONS attributed the rising deficit to the 32 per cent slump in corporation tax receipts.
"Concentrating on one month in isolation can give a distorted picture as movements can be erratic," the agency cautioned.
Britain has experienced public sector deficits for the last three years, as opposed to surpluses between 1998 and 2003.
Public sector debt is now equal to 37 per cent of the UK's GDP, narrowly meeting the government's target by three percentage points.
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