Rise in government borrowing adds to George Osborne's woes George Osborne (left) with the Treasury chief secretary, Danny Alexander, on a tour of a Crossrail site. Photograph: Toby Melville/PA The chancellor, George Osborne, could be forced to borrow an extra £20bn this year after figures showed a bigger-than-expected shortfall in the public finances in June. A rise in government spending to cope with higher social security bills, combined with a fall in tax receipts, has left the Treasury scrabbling to meet its borrowing target for the end of the year. Osborne expects to borrow £120bn this year, but a near 12% overshoot in his calculations in the first few months of the year could lead to a £140bn borrowing requirement when the tax year finishes next April. The chancellor has predicted that a mix of tax rises and welfare cuts will cut borrowing to just £21bn by 2016/17. But the expectation of a prolonged double dip recession and a recovery that could take years to get under way has undermined his plans. The prime minister, David Cameron, said earlier this week that he may need to keep austerity measures in place for a decade to reach the government's borrowing target. A spokesman for the Treasury said it was too early to tell how the public finances would look in a year. He added that the level of borrowing could be revised downwards, as it was last year, to below the target. However, several economists said the chancellor should take little comfort from revisions to past data. The International Monetary Fund has also warned the government that it risks permanently damaging economic output unless it spends more on infrastructure projects and delays welfare cuts to boost confidence and private consumption. Howard Archer, chief economist at IHS Global Insight, said: "Three months into the fiscal year, and Osborne is already facing an almighty struggle to meet his fiscal targets for 2012/13 and looks ever more likely to miss them. The current weakness of the economy is clearly taking a serious toll on tax receipts while spending is currently rising at a well above target rate. It is of only minor consolation to the chancellor that the Public Sector Net Borrowing Requirement (PSNBR) in 2011/12 was revised down to £125.7bn from the previously reported £127.6bn. The Office for National Statistics said the PSNBR, excluding the bank rescue funds, rose last month to £14.45bn from £13.92bn in June 2011. Archer said borrowing for the first three months of the financial year amounted to £42.9bn, which is up from £38.4bn in the first three months of 2011/12. "In other words, the underlying PSNBR is up by 11.7% year-on-year in the first three months of 2012/13 compared with a targeted drop over the whole fiscal year of around 4.5%," he said. If this trend was to be continued over the rest of the fiscal year, the PSNBR would come in around £140bn, which would be £20bn above the targeted £120bn. Chris Williamson, chief economist at financial data provider Markit, said the government's plans had been undermined by a lack of growth. First, and most significantly, weaker-than-anticipated growth has led to lower-than-expected tax revenues. Tax revenues rose just 3.6% on a year ago in June, and are up just 2.5% so far this tax year," he said. There seems little scope for revenue growth to pick up soon, given the fall in [industry surveys] to an eight-month low in June. The government's deficit reduction target was based on a projection of economic growth of 0.8% this year, but most forecasters now expect GDP to rise by less than half of the official forecast. Williamson added that weak growth had resulted in a further impact in higher welfare bills, underpinned by an unemployment rate of 8.1%. He added: "Government spending fell 0.8% on a year ago in June, which is encouraging, but is 2.1% higher so far this year compared with last year." Much of the current overshoot in borrowing was due to a smaller surplus in local government finances than last year, because of deferred or reduced central government grants, the ONS added. While rising unemployment has driven up spending on benefits, earlier this month the Institute for Fiscal Studies thinktank said Treasury figures showed government departments had spent £6.7bn less in the 2011/2012 fiscal year than planned under the austerity budget. Britain's total public sector net debt, excluding financial sector interventions, rose to £1.04tn or a record 66.1% of GDP in June. Including the cost of bank support, it now represents 144.5% of GDP.