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UK public finances in biggest surplus for four years | UK public finances in biggest surplus for four years |
(40 minutes later) | |
The government received more money than it spent in January leaving it with its highest monthly surplus in four years. | The government received more money than it spent in January leaving it with its highest monthly surplus in four years. |
href="http://www.ons.gov.uk/ons/rel/psa/public-sector-finances/january-2012/stb---january-2012.html" >The Office for National Statistics (ONS) said the surplus followed a fall in local government borrowing and a rise in tax receipts. | |
It said the public sector made a net repayment - excluding financial interventions - of £7.75bn, up from £5.2bn a year ago. | It said the public sector made a net repayment - excluding financial interventions - of £7.75bn, up from £5.2bn a year ago. |
January's finances are often in surplus because of a spike in tax receipts. | January's finances are often in surplus because of a spike in tax receipts. |
The government has borrowed £93.5bn in the tax year to date, down from £109.14bn in 2010/11, | |
Chris Williamson, chief economist at Markit, said the figures meant the government was on track to meet or even beat its borrowing target of no more than £127bn this year. | |
"With two months to go, that target looks easily attainable," he said. | |
"The target would still be met even if the deficit in February and March matched the recent record of £29bn seen for these two months in 2010." | |
In the year 2010-11, the government borrowed £136bn. | |
Shaky ground | |
The UK's total public sector net debt, excluding financial sector interventions, fell back to £988.7bn, or 63% of gross domestic product, having breached £1tn in December. | |
The level of government borrowing is one of the data series looked at by ratings agencies, which judge the likelihood of a borrower defaulting, something that can affect the cost of borrowing. | The level of government borrowing is one of the data series looked at by ratings agencies, which judge the likelihood of a borrower defaulting, something that can affect the cost of borrowing. |
Last week, the ratings agency Moody's warned that Britain could lose its top, triple-A credit rating in the next 18 months. | Last week, the ratings agency Moody's warned that Britain could lose its top, triple-A credit rating in the next 18 months. |
Ross Walker, economist at RBS, said these borrowing figures could weigh positively on Moody's continuing assessment: "It's a good set of data. We are still borrowing huge sums, but against a backdrop where we had Moody's negative outlook and there was growing talk about the UK's rating... these numbers help." | |
Despite the improved borrowing figures, the UK economy remains on shaky ground. | Despite the improved borrowing figures, the UK economy remains on shaky ground. |
Official data on Friday is expected to confirm the economy shrank by 0.2% in the final three months of 2011, and the Bank of England last week said it expected the economy to "zigzag" in and out of growth this year. | Official data on Friday is expected to confirm the economy shrank by 0.2% in the final three months of 2011, and the Bank of England last week said it expected the economy to "zigzag" in and out of growth this year. |
The Chancellor, George Osborne, will deliver his annual Budget next month. | |
The chief economist at the British Chambers of Commerce, David Kern, said the January borrowing figures gave him scope to help the economy grow. | |
"This gives the chancellor some room for flexibility in his upcoming Budget to implement measures to support growth and help companies create jobs, invest and export," he said. | |
"This should include an effective credit easing programme and an aggressive reduction in red tape." |