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Published: Wed, February 22, 2017
Economy | By Melissa Porter

UK January Budget Surplus Highest Since 2000


United Kingdom public sector net borrowing was in surplus by £9.4bn in January - a key month for income tax receipts - up a touch from £9.1bn in the same month a year ago.

However, it fell short of economists' expectations, who had pencilled in a more generous figure of £14 billion.

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.

It was the lowest year-to-date borrowing total over this period since 2008.

A spokesman for the Treasury said policymakers remained "committed to returning the public finances to balance and building on our progress in reducing the deficit from 10pc to 4pc of gross domestic product (GDP) over the last six years".

The changes in methodology and increased transfers from the Bank of England should allow the government to undershoot the full-year 2016/17 estimate of £68.2bn made by the Office of Budget Responsibility (OBR).

The British Chambers of Commerce (BCC) said that stronger than expected growth over the most recent quarter has boosted tax revenue in the United Kingdom, which indicates that Philip Hammond might indicate lower short-term borrowing forecasts during his Budget.

Mr Hammond is aiming to bring the UK's annual borrowing down to £68bn for the year to the end of March - and now looks on course to achieve it.

That was smaller than a forecast for a surplus of 13.8 billion pounds in a Reuters poll of economists.

The official statisticians now record receipts when the economic activity that generated them occurred rather than when they were received by the exchequer.

The latest figures - which exclude the impact of state-backed banks - mean that for the first ten months of the financial year, borrowing stood at £49bn, down 22% on a year earlier. In the past, receipts in January have also been boosted by payments of corporation tax.

The statistics agency said the figure was the highest amount since records began in April 1999.

"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".

This was the highest January surplus since 2000, and although it came in worse than consensus estimates for a £14bn surplus, it leaves Chancellor Philip Hammond on track to meet his 2016/2017 fiscal targets.

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