UK public finances see record surplus in January
By Alexander Bueso
Date: Thursday 21 Feb 2019
(Sharecast News) -
Britain's public accounts enjoyed a record surplus at the start of 2019, which economists said would likely allow the Chancellor to provide another modest fiscal boost to the economy.
According to the Office for National Statistics, the UK's public sector net borrowing requirement, excluding public sector banks, hit £14.9bn, easily dwarfing the equivalent year ago figure of £9.3bn and economists' forecasts for £10.0bn.
Hence, on current trends, public borrowing now looked set to undershoot the Office for Budget Responsibility's full-year forecast, economists said.
Driving last month's surplus, tax receipts from self-assessments increased by £1.9bn and those from capital gains by £1.2bn, although as Samuel Tombs at Pantheon Macroeconomics pointed out, "they tell us nothing about the economy's current momentum" because they were in fact a reflection of the strength of the economy during the previous fiscal year.
Nevertheless, Tombs estimated that on current trends, borrowing would fall just over £2.0bn short of the OBR's forecast for £25.5bn.
Indeed, PAYE income tax and VAT receipts had clocked in with growth of 7.5% and 5.6%, respectively, which was comfortably above the year-to-date trends in place before Thursday.
Thus, Tombs said, "Strong growth in these timely receipts suggests that the economy probably hasn't lost as much momentum as many business surveys imply.
"[...] We continue to think that the Chancellor will be able to set fiscal policy to boost the economy modestly again in 2020 in the Budget later this year. But with the economic outlook highly uncertain at present, next month's Spring Statement probably will be a holding operation."
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