Record surplus delivers fillip for Hammond ahead of Spring Statement

Chancellor Philip Hammond has been given a boost after official figures showed the Government recorded its largest January budget surplus last month, as the Treasury enjoyed a bumper haul of tax receipts.

Figures from the Office for National Statistics show that public finances were in surplus by £14.9 billion last month, the largest January total since records began in 1993.

Economists had expected a surplus of £10 billion.

It is £5.6 billion higher than in January last year and was driven by an increase in self-assessment income tax and capital gains tax receipts.

Combined, they came in at £21.4 billion last month, which is £3.1 billion more than the same month last year.

Self-assessment income tax receipts in January were £14.7 billion, an increase of £1.9 billion, and capital gains tax receipts came in at £6.8 billion, up £1.2 billion.

It means the Government has a chance of meeting its £25.5 billion borrowing target for the year, despite an economy faltering amid acute Brexit worries.

Howard Archer, chief economic adviser to the EY ITEM Club, said: “A record high surplus on the January public finances provides a much-needed welcome boost for Chancellor Philip Hammond as he faces a worrying backdrop to his Spring Statement on 13 March.

“With the economy clearly struggling early on in 2019 after a sharp slowdown in the fourth quarter of 2018 and the Brexit situation highly uncertain, the Chancellor will have a lot on his mind when he presents the Spring Statement.

“It looks highly likely that he will have to announce downgraded growth forecasts from the OBR (Office for Budget Responsibility) at least for the near term with possible negative ramifications for expected budget deficits.”

ONS data also showed that borrowing in the current financial year to January came in at £21.2 billion, £18.5 billion less than the same period last year and the lowest year-to-date figure for 17 years.

The ONS added that public sector net debt increased by £26.9 billion to £1.6 trillion in January, equivalent to 74% of gross domestic product (GDP).

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