Public sector borrowing declined in May from £17.4bn to £16bn, according to the Office for National Statistics (ONS).

The decline of 8% means that total government debt now stands at £903bn - equivalent to 62% of the UK's annual economic output.

The new government coalition has pledged to cut the record peace time deficit and will unveil detailed plans in next weeks emergency Budget.

May's borrowing figure was less than analysts' expectations, but commentators said it remained far too high.

"Does this detract from the case for a big fiscal tightening next week? No. UK borrowing remains unsustainably high and fully justifies a big retrenchment in government spending," said Philip Shaw, chief economist at Investec.