The Government says it will look at ways to return the Budget to surplus ahead of schedule, despite a worse-than-expected deterioration in the Treasury's forecasts for the current financial year.
The Treasury on Tuesday said it expects the cash deficit will reach $15.6 billion this financial year, up from the $13.3 billion deficit forecast in the Budget in May.
A lower tax take, compensation for leaky homes and the devastating Canterbury earthquake in September pushed the deficit higher.
The Government's forecast operating deficit, excluding gains and losses from investments, is forecast to be $11 billion.
The tax take has been $1.2 billion below Budget forecasts in the first four months of the year. It is forecast to be $3.2 billion lower in the period to 2015.
Despite lower than expected revenue, the Treasury still expects the Government to return to surplus by 2015-16 financial year, in line with Budget forecasts, due to lower spending on benefits.
Mr English says the Government's books will not be strong enough to withstand another downturn without adding substantially to its debt and will remain vulnerable until 2020.
He says there will be no big spend-ups in the 2011 election year and the Government will look at ways to get back to surplus ahead of schedule.
The Labour Party on Tuesday blamed the worse-than-expected state of the public finances on the National-led Government's tax cuts.
But Mr English rejected this, saying all National's tax cuts have been matched either by tax increases elsewhere or spending cuts.
