George Osborne's hopes of cutting Britain's budget deficit this year are hanging in the balance despite the government running a bigger than expected surplus last month.
In the last set of figures before next month's budget, the Office for National Statistics said there was a net surplus in January of £11.4bn – the result of bumper income tax receipts and one-off factors.
Last month's deficit showed that the exchequer was in the black by £5bn more than in January 2012, although £3.8bn of the improvement was the result of the Bank of England's quantitative easing programme being paid to Hothe Treasury.
However, the Office for National Statistics said that once special factors such as the transfer of the Royal Mail pension fund and the QE profits were excluded the budget deficit for the first 10 months of the 2012-13 financial year was 6.6% higher than in the same period of 2011-12.
City analysts said that on the basis of the latest ONS data, the chancellor will struggle to meet his forecast in the autumn statement that borrowing will be lower this year than in 2011-12.
James Knightley at ING bank said: "January is always a good month for revenues as it is the deadline for income tax and there are big corporation tax revenues in the month, too.
This year it also got a boost from the transfer of money from the Bank of England, reflecting the partial payment of some of the interest income the BoE has received on its gilt holdings resulting from QE.
"Consequently, the underlying story isn't quite as good. Indeed, the UK's AAA rating remains under threat and with economic activity remaining subdued and tax revenues disappointing, Chancellor Osborne has little wiggle room when he presents his annual Budget next month."
The Treasury said: "Today's public sector finances show an improvement on last year. They underline what the governor of the Bank of England said last week: the road ahead will be difficult, but the economy is on the right track. The deficit has been cut by a quarter in two years and over a million private sector jobs have been created."
guardian.co.uk
In the last set of figures before next month's budget, the Office for National Statistics said there was a net surplus in January of £11.4bn – the result of bumper income tax receipts and one-off factors.
Last month's deficit showed that the exchequer was in the black by £5bn more than in January 2012, although £3.8bn of the improvement was the result of the Bank of England's quantitative easing programme being paid to Hothe Treasury.
However, the Office for National Statistics said that once special factors such as the transfer of the Royal Mail pension fund and the QE profits were excluded the budget deficit for the first 10 months of the 2012-13 financial year was 6.6% higher than in the same period of 2011-12.
City analysts said that on the basis of the latest ONS data, the chancellor will struggle to meet his forecast in the autumn statement that borrowing will be lower this year than in 2011-12.
James Knightley at ING bank said: "January is always a good month for revenues as it is the deadline for income tax and there are big corporation tax revenues in the month, too.
This year it also got a boost from the transfer of money from the Bank of England, reflecting the partial payment of some of the interest income the BoE has received on its gilt holdings resulting from QE.
"Consequently, the underlying story isn't quite as good. Indeed, the UK's AAA rating remains under threat and with economic activity remaining subdued and tax revenues disappointing, Chancellor Osborne has little wiggle room when he presents his annual Budget next month."
The Treasury said: "Today's public sector finances show an improvement on last year. They underline what the governor of the Bank of England said last week: the road ahead will be difficult, but the economy is on the right track. The deficit has been cut by a quarter in two years and over a million private sector jobs have been created."
guardian.co.uk
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