UK public finance surplus

21 Feb 2019

UK public finance hit record surplus

The UK government has recorded a £14.9 billion surplus in borrowing, its largest in January since records began in 1993.

Official records show the figure as being £5.6 billion greater than a year ago.

An increase in self-assessment income tax and capital gains tax receipts by 14% is what is said to have resulted in the great surplus.

The surplus puts the UK’s public finances on a stronger footing amid the current economic and political worries.

According to analysts, the Chancellor, Philip Hammond will be able to use this extra money for his next economic update, uplifting the Spring Statement among serious Brexit concerns.

Chief economic adviser to the EY item club, Howard Archer, said:

“A record high surplus on the January public finances provides a much-needed welcome boost for Chancellor Philip Hammond as he faces a worrying backdrop to his Spring Statement on 13 March.

“With the economy clearly struggling early on in 2019 after a sharp slowdown in the fourth quarter of 2018 and the Brexit situation highly uncertain, the chancellor will have a lot on his mind when he presents the Spring Statement.

“It looks highly likely that he will have to announce downgraded growth forecasts from the OBR [Office for Budget Responsibility] at least for the near term, with possible negative ramifications for expected budget deficits.”

Data from the Office for National Statistics (ONS) also reported that borrowing in the current financial year to January stood at £21.2 billion, which was £18.5 billion less than the same period last year and the lowest year-to-date figure in 17 years.

Not only were there strong increases for tax revenues through income and capital gains, but a rise for taxes on corporate profits was also seen boosting public finance. However, there was a fall in property transaction tax revenue, reflecting the slowing housing market.

By Lyba Nasir