Government finances record £9.4bn surplus in January

The UK budget balance showed the biggest surplus for January since 2000, the Office for National Statistics showed Tuesday.

Under the previous methodology, the budget surplus would have stood at GBP15.2 billion, the ONS said, the highest January surplus on record.

LONDON-The U.K. ran the highest January surplus in almost two decades last month, according to data released Tuesday, as public finances were boosted by higher income and capital-gains receipts.

The surplus was GBP0.3 billion wider than in the same month of 2015, but significantly smaller than that expected by analysts polled by The Wall Street Journal, who forecast a surplus of GBP13.9 billion.

For the first ten months of fiscal 2016/17, the borrowing requirement declined to £49.3bn from £62.9bn the previous year and this was the lowest 10-month deficit since 2007/08.

The Chancellor will base his budget calculations on updated figures on growth and borrowing supplied by the Office for Budget Responsibility (OBR).

The UK's finances were only slightly more in surplus last month than in January 2016, despite bumper income tax revenues, but the government remains on course to meet its latest borrowing targets.

Self-assessment income tax receipts in January 2017, which related to income received in the 2015-16 financial year, were boosted by people bringing forward dividend payments to avoid paying a higher rate of tax on dividend income from April 2016.

"This would be well below the OBR's estimate of around £68 billion in November, although probably still higher than the pre-referendum estimate of £55.5 billion at the time of the March 2016 Budget".

Earlier this month, the EY Item Club economic think tank said that estimated borrowing for the 2016-17 financial year could be revised down to £65bn from the £68bn forecast made in the Autumn Statement.

The methodological changes announced Tuesday are created to smooth the path of corporation-tax receipts away from the large-scale payments now seen every three months.

"This was largely due to a £4 billion boost to estimated corporation tax receipts, partly due to a methodological shift from cash to accruals accounting, as well as a cut in estimated European Union budget contributions over this period".

Corporation tax revenues, which are usually strong in January too, were up 5.4 percent at 4.2 billion pounds. This month's figures are the first to incorporate this change.

  • Joanne Flowers