Government finances show big surplus in January

The £16.7bn surplus was double last January’s but lower than economists expected.
Government finances show big surplus in January
People in the streetEPA

The government finances showed a large surplus last month, more than double the surplus last January.

The surplus – the difference between spending and tax income – rose to £16.7bn in January, the Office for National Statistics (ONS) said.

These are the last set of public finance figures to be released before the Chancellor’s Budget in March.

Jeremy Hunt has hinted he wants to cut taxes, which are on course to rise to the highest level for decades.

The surplus in the government’s finances could add fuel to the argument for tax cuts next month.

However, the surplus was lower than most economists had predicted.

The surplus is the result of higher tax receipts and lower spending, with the government no longer subsiding household energy bills for example.

Every January, the government tends to take more in tax than it spends in other months due to the amount it receives in self-assessed taxes, according to the ONS.

In addition, the cost of financing the UK’s debt has gone down as inflation has fallen.

“Overall expenditure was down on this time last year, despite increased spending on public services and benefits,” said Jessica Barnaby, deputy director for public sector at the ONS.

Chief secretary to the Treasury, Laura Trott said: “While we will not speculate over whether further reductions in tax will be affordable in the Budget, the economy is beginning to turn a corner, with inflation down from over 11% to 4%.”

Capital Economics, an economics think tank, suggested using the headroom that the chancellor will have as a result of the surplus to cut taxes amounted to “putting the election before prudence”.

In the year from April 2023 public borrowing has totalled £96.6bn.

Overall the UK’s debt has risen compared to a year ago and remains at levels last seen in the early 1960s, the ONS said, at around 96.5% of the size of the economy, measured by GDP.

One of the government’s key pledges is that debt should be falling as a percentage of GDP in five years’ time.

Source: bbc.co.uk

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