Warning lights are flashing on the public finances today after borrowing hit a new record outside Covid last month.

Government borrowing spiked to £23.3billion in May, far higher than analysts had anticipated.

The level was the highest for the month apart from 2020, when the pandemic was peaking. 

The rise was fuellled by debt interest costs surging to a new May peak, as well as higher spending - which outweighed bigger tax revenues as the burden heads towards a new peak.

The grim numbers will fuel concerns about the danger of Labour lurching to the Left under Andy Burnham, as many of his MP supporters want.

The outgoing Greater Manchester Mayor is poised to mount a coup against Keir Starmer after romping to victory in the Makerfield by-election overnight.  

The Office for National Statistics (ONS) said borrowing was nearly a third (30.4 per cent), or £5.4billion, higher this May than a year earlier.

It was also more than the £18.8billion expected by most economists and the £17.7billion forecast by the Treasury's Office for Budget Responsibility (OBR) watchdog.

Interest costs for Government debt jumped to £11.7billion – the highest ever recorded in any May.

Central government expenditure on goods and services increased by £2.2billion to £39.6billion in May, as inflation took its toll.

And benefits paid out increased by £1.2billion to £28.4billion, largely due to inflation-linked rises including to the state pension.

The extra costs outweighed a £2.7billion bump in tax revenues, at £63.7billion.

That included £1.2 billion extra in VAT and £900million in income tax. 

ONS senior statistician Tom Davies said: 'Borrowing in the first two months of the financial year was nearly £9billion higher than the same period of 2025.

'Spending on debt interest, public services, investment and benefits all increased in May 2026, compared with last May, more than outweighing higher tax receipts.'

The markets have been spooked by signs that Mr Burnham could take Labour to the Left with a major spending splurge funded by borrowing and even more tax.

He has hinted at wealth taxes, revaluing council tax and called for nationalisations.

But Mr Burnham has also executed screeching U-turns on a slew of ideas, including ruling out billions of pounds of compensation for so-called WASPI women just hours after supporting the prospect. 

The former Cabinet minister caused a furore at last year's Labour conference in Liverpool after suggesting in an interview that politicians had to 'get beyond this thing of being in hock to the bond markets'.

But he later seemed to row back from these comments, saying last month he supported Ms Reeves's fiscal rules.

He told ITV: 'There needs to be a plan to get debt down, but beyond that, we need to change politics and take the turbulence out of British politics, because that is a cause of uncertainty that then has that impact in the markets.'

Rachel Reeves, who is regarded as unlikely to be kept on as Chancellor if Mr Burnham becomes PM, delivered a shot across his bows yesterday, warning the fiscal rules must stay in place.

She told a conference: 'We got elected on the promise to return stability to the economy, and anyone who wanted to deviate from that will not be fulfilling the manifesto commitments.'

Ms Reeves has already pushed the tax burden towards a record high, with unprecedented increases over the past two years.