The spending watchdog said higher pay deals for public sector workers were a key factor.

“The difference with our forecast profile is driven primarily by higher-than-forecast consumption spending by government departments (£5.8bn), which appears related to strong growth in public sector pay,”  the OBR said.

Darren Jones, chief secretary to the Treasury, said the borrowing figures underlined “ the tough decisions that are needed to fix the foundations of our economy”.

It follows a report in the Guardian that Ms Reeves is considering increasing inheritance tax  and capital gains tax in the upcoming Autumn budget.

The Labour Party promised it would not increase the headline rates of income tax, national insurance and VAT in its election manifesto, but earlier this month Ms Reeves declined to rule out an increase to capital gains tax.

Alex Kerr at Capital Economics said spiralling spending meant the Chancellor was likely to launch a multi-billion pound tax raid in October’s Budget.

“We think that she will look to raise an additional £10bn a year via higher taxes in the Budget and increase borrowing by around £7bn a year,” he said.

The borrowing figures cover a period before Ms Reeves agreed a 22pc increase for junior doctors and 14pc package for train drivers. Despite the agreement, drivers on the East Coast mainline are set to start another three months of weekend strikes.

Government income hit £91bn in July, £1.7bn higher than the same month last year, after the economy grew strongly in the first six months of the year.

Rising income tax, corporation tax and VAT revenues outweighed the drop in national insurance caused by the cut to the headline rate of NI under the previous Conservative Government.

Jessica Barnaby from the ONS said: “Revenue was up on last year, with income tax receipts in particular growing strongly. However, this was more than offset by a rise in central government spending.”

Most benefits were uprated in line with inflation in April, while frozen income tax bands mean workers are gradually being taxed more through stealth.

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