Rcahel Reeves plans to ramp up spending were dealt a bow with Treasury borrowing passing official forecasts made in the Budget.
Government borrowing rose by more than expected to £17.8 billion last month, the highest December figure for four years, according to official data.
The Office for National Statistics (ONS) said public sector net borrowing was £10.1 billion higher than the same month last year.
Economists had predicted £14.1 billion of borrowing for December.
The data covers a period when the UK cost of borrowing had been climbing but before the turmoil in global bond markets earlier this month that sent the yield – effectively the interest rate – on government debt surging.
Darren Jones, the chief secretary to the Treasury, said: “Economic stability is vital for our number one mission of delivering growth, that’s why our fiscal rules are non-negotiable and why we will have an iron grip on the public finances.
“Through our Spending Review we will interrogate every line of government spending for the first time in 17 years. We’ll root out waste to ensure every penny of taxpayer’s money is spent productively and helps deliver our Plan for Change.”
Ms Reeves and Business Secretary Jonathan Reynolds are currently at the World Economic Forum to drum up investment for the UK.
Chancellor Ms Reeves announced on Tuesday that the spending review, when she is expected to reveal multi-year spending plans for Government departments, will take place on June 11.
