UK government borrowing up £500m in June

British Chancellor George Osborne's debt-busting plans were dealt a blow today when figures showed underlying Government borrowing rose around £500m (€580m) in June.

Public sector net borrowing, excluding distortions such as bank bailouts and quantitative easing (QE) cash transfers, increased in June to £12.4bn (€14.4bn) from £11.9bn (€13.8bn) a year earlier, the Office for National Statistics (ONS) said today.

However, including a £3.9bn (€4.5bn) transfer of QE cash from the Bank of England's asset-buying drive, June's deficit fell by £3.4bn (€3.9bn) year-on-year to £8.5bn (€9.9bn).

The ONS also cast doubt on how much money the British government will claw back from Swiss bank accounts, knocking May's £3.2bn (€3.7bn) estimate to just £342m (€396.7m) in actual receipts.

There was some cheer as a further revision showed annual underlying public sector net borrowing fell by £2.1bn (€2.4bn) in the last financial year, reversing last month's upward revision.

May's borrowing figures were flattered by the £3.2bn (€3.7bn) estimate of Swiss taxes, but the ONS said today it is taking a "more cautious approach" on how much tax it will be able to recoup from Swiss accounts after fresh information from the Swiss Bankers Association.

It will now only record the Swiss cash when it is received.

The Government struck a deal in January with Swiss authorities to recoup tax from UK residents' bank accounts in the country.

Higher local government borrowing in June offset a 15.2% increase in tax receipts from businesses and households to drive the underlying monthly deficit higher.

But the ONS said figures are likely to be subject to revisions as more data is received from councils.