The government borrowed more than expected in the year to March due to increased spending on pay and benefits, according to official figures.

Borrowing, the difference between spending and income from taxes, was £151.9bn in the year to March, up £20.7bn from the year before.

The amount borrowed was much higher than the £137.3bn predicted by the UK’s official forecaster.

The Office for National Statistics (ONS), which released the figures, said borrowing the financial year was the third highest on record.

“Despite a substantial boost in income, expenditure rose by more, largely due to inflation-related costs, including higher pay and benefit increases,” said Grant Fitzner, chief economist at the ONS.

He added at the end of the financial year, debt remained “close to the annual value of the output of the economy, at levels last seen in the early 1960s”.

The higher borrowing figures come as Chancellor Rachel Reeves is set to attend the annual meetings of the IMF and World Bank in Washington.

On Tuesday, the IMF said the UK economy would grow less than previously predicted, up 1.1% in 2025 instead of 1.6%, in part due to the global fallout from US trade tariffs.