Chancellor will have to issue £200bn of government bonds this year to cover debt

As he prepares to unveil today the most important and most delayed Budget since Labour came to power, it emerged that the chancellor will be forced to issue over £200bn worth of government bonds this year, according to the Financial Times.

Public borrowing is set to reach £170bn-£180bn, the highest level in peace time and £50bn more than the Debt Management Office estimated last month.

The Treasury is allowing for £60bn of losses arising from the failure of the government's attempts to save the banking system.

George Osborne, shadow chancellor, said: “Now we know the potentially massive cost of Gordon Brown's utter failure to regulate the banking system.”

Meanwhile, the International Monetary Fund (IMF) said that UK banks have written off just one-third of the losses they face and will have to raise at last ($125bn) £85bn in capital to rebuild their balance sheets.