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(Alliance News) - The UK government recorded a public finance surplus in January as the economy continued to reopen, figures from the Office for National Statistics showed on Tuesday.
January is typically a month when income tax payments come in, namely from receipts of self-assessed taxes, so this often leads to a surplus.
UK public sector net borrowing - excluding public sector banks - was a surplus of GBP2.9 billion in January, swinging from a deficit of GBP16.8 billion in December and a GBP2.5 billion deficit in January of last year. However, the figure was lower than the GBP3.5 billion market forecast.
The figure comes as UK Chancellor Rishi Sunak faces pressure to reverse planned increases in National Insurance contributions in April.
"Tax revenues in January, at GBP91.5 billion, were well above the OBR's forecast of GBP85.3 billion. That suggests most self-assessment tax returns were filed by the 31st January deadline despite the one-month extension and means the figures were flattered by the usual January bump from higher income taxes," said Bethany Beckett of Capital Economics.
"We expect the combination of higher inflation and interest rates to keep pushing borrowing above the OBR's forecast in the coming months, resulting in cumulative borrowing of GBP175-180 billion. That will be unwelcome news for the chancellor, who still has two more public finances data releases to go before the Spring Forecast on March 23," Beckett added.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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