Record borrowing ups heat on Brown

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Public sector net borrowing for the first quarter of the financial year was 24.4 billion pounds - the biggest quarterly figure since records began in 1946.

The current budget deficit for the period was 20.4 billion pounds, also a record high.

"Horrific, absolutely horrific. Net borrowing so far this financial year is almost 10 billion pounds above the same period last year, which suggests that the full year figure is going to be way, way above official government forecast," said Investec economist Philip Shaw.

As chancellor, Brown established two rules to govern public finances - that the government only borrows to invest over the economic cycle and that public debt be limited to a prudent and sustainable level, defined as 40 percent of GDP.

Public debt is currently running close to 40 percent and analysts say the government could breach the limit as the economy is slowing and there is greater pressure to spend.

Friday's Financial Times said Treasury officials were privately working on plans to reform the rules and this could be announced in the pre-budget report in the autumn, and possibly allow for greater borrowing.

A Treasury spokesman said the report was "pure speculation and based on comments that are over three months old".

"We have always said that at the end of this cycle we will set out the rules for the next cycle," he said.

However, suggestions that the government might be about to relax its rules to allow more borrowing spooked markets.

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