The UK government borrowed £24.3 billion in April, the second-highest on record for the month.
Economists had forecast a £20.9 billion deficit.
The budget deficit was expected to shrink to 3.6% of GDP by 2026/27, but the Iran war risks slowing the economy.
Finance Minister Rachel Reeves said she would raise taxes on oil and gas companies to fund support.
Political pressure mounts as Labour MPs demand Prime Minister Keir Starmer resign.
