Official borrowing figures published yesterday by the Office for National Statistics (ONS) showed that the Government enjoyed its highest surplus in public finances for five years in January, at £11.4bn, which was £5bn more than in January last year.
There is often a surplus in funds in January because of tax receipts from self-employed people and businesses. Having said that, the income from corporation tax was down 13.5 per cent last month.
Public sector net borrowing, excluding financial interventions, for the financial year to date is now £93.8bn. This is £1.5bn higher than at the same point a year earlier.
While January’s borrowing figures were better than many economists had expected, they are enhanced by a £3.8bn windfall which the government received from the Bank of England (BoE) under a new agreement.
Under the arrangement, interest the BoE earns on holding government debt is transferred back to the Treasury. Taking that out, the surplus was £7.6bn in January.
The ONS said that once such special factors, including the transfer of the Royal Mail pension fund have been excluded, the budget deficit for the first 10 months of the 2012-13 financial year was actually 6.6 per cent higher than in the same period of 2011-12.
On the basis of the latest ONS data, it is likely that the Chancellor will struggle to meet his forecast in the autumn statement that borrowing will be lower this year than in 2011-12.
However, a spokesman for the Treasury said that public sector finances show an improvement on last year and underline what the governor of the Bank of England said last week that the road ahead will be difficult, but the economy is on the right track.
He added that the deficit has been cut by a quarter in two years and more than a million private sector jobs have been created.