A robust growth in income tax collections helped the UK register a surplus in public accounts. The latest figures released by the Office for National Statistics (ONS) show that public sector net borrowings have recorded a surplus of £3.735 billion, the highest since July 2008.
The higher than expected surplus was registered since in January most income tax bills fall due. An exception was however, recorded in January 2010, when the ONS had reported a deficit of £1.266 billion.
Total public debt is also lower compared to last year and has been recorded at £113 billion. The £14.1 billion lower borrowing amount than last year also bodes well for the government and will help it meet its total borrowing target of £148.5 billion till March 2011.
The higher tax receipt will help the government prune its budget deficit. The recent hike in VAT to 20% and cut in public spending has earned the government US Treasury Secretary Timothy Geithner’s approval, who lauded the government’s plan to cut budget deficit.
“January is a key month, you get major income tax and corporation tax inflows and they seem to be robust”, said Ross Walks of RBS Financial Markets.
“Public spending growth is also moderating so both sides of the public sector ledger are moving in the right direction, all of which leaves them comfortably on track to meet their full-year forecasts set out in the emergency budget”, he added.
“It’s welcome that this January saw the first surplus for the public finances in two years, but it will take more than one month in surplus to deal with borrowing of almost £150bn pounds for this financial year”, said a treasury spokesman In a separate development.