Britain had a larger budget deficit than economists forecast in May as the recession depressed tax receipts and government spending surged.

The shortfall, which excludes government support for banks, was £17.9 billion compared with £15.2 billion a year earlier, the Office for National Statistics said in London today.

Economists forecast a deficit of £14.8 billion, according to the median estimate in a Bloomberg News survey.

Spending jumped 7.9 per cent and revenue rose 1.6 per cent. Income-tax receipts fell 7.3 per cent.

The figures may provide ammunition to the opposition Labour Party, which says the government is making the recession worse by trying to cut the deficit too quickly. Prime Minister David Cameron and Chancellor of the Exchequer George Osborne have staked their reputations on all but eliminating the shortfall, currently 8.4 per cent of gross domestic product, by 2017.

"Revenues have slowed sharply in recent months, and this weakness is likely to continue given the sharp slowdown in the economy," said Michael Saunders, chief European economist at Citigroup in London.

In the first two months of the fiscal year, the budget shortfall widened to £28.4 billion from £24.5 billion in the year-earlier period.

The figures exclude the transfer of Royal Mail pension fund assets in April.

Revenue rose 2.1 per cent and spending climbed 3.7 per cent.

A cash measure showed the public finances in surplus by £4.4 billion in May. A deficit of £4 billion was forecast.

Excluding financial-sector interventions the deficit was £15.6 billion last month.

The deficit in the fiscal year that ended in March was revised up to £127.6 billion from a previously estimated £124.4 billion.

Bloomberg