It has been revealed that the outstanding Government debt has reached a total of £799 billion, or 56.6% of UK GDP – the highest since records began in 1974.

The Office for National Statistics exposed that new borrowing in June was £13 billion, almost double as much as a year ago, after the recession shrank tax receipts. Analysts had predicted borrowing to reach £15.5 billion in June.

The figures also echo higher spending on social security benefits and bank bail-outs. The situation is so bad, that one economist described the predicament as "dire".

Philip Shaw, a chief economist said: "The state of public finances is dire and that a considerable degree of fiscal tightening will be required. The figures are volatile on a month-on-month basis. The size of the shortfall and volatility mean there is little to celebrate."

Public borrowing for May was altered down to £18.6 billion from an initial estimate of £19.9 billion. However, businesses have warned the Government not to sit back.

David Kern, the chief economist at the British Chambers of Commerce stated: "It would be wrong to tighten policy while the recession continues, but maintaining Britain's international credibility requires a robust plan for restoring our public finances over the medium-term."

He added: "This must focus on curtailing public spending across the board, while avoiding damaging measures that would harm wealth-creating businesses."