Pressure on the public finances intensified last month after higher spending contributed to an unexpected rise in the deficit.
Fresh figures published by the Office for National Statistics (ONS) show government borrowing stood at £1.8billion in July, £700million more than a year ago.
Economists had not expected any further increase in borrowing while the Office for Budget Responsibility (OBR) had forecast a £500million surplus.
A higher tax take – including record self-assessed income tax receipts – failed to offset higher borrowing caused by inflation.
The ONS said the government had spent £2billion more on social benefits compared with a year ago, while spending on
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