UK Jan PSNB -12.6 bln stg, biggest monthly surplus ever
[Tax receipts up in the UK as well. seems to be oil related. Mish]
Monday, February 20, 2006 9:50:40 AM
afxpress.com
LONDON (AFX) - LONDON (AFX) - Chancellor of the Exchequer Gordon Brown received some welcome news this morning ahead of next month's budget as official figures revealed that the government recorded its biggest ever monthly surplus during January
The Office for National Statistics revealed that public sector net borrowing, the government's preferred measure of the public finances, came in at -12.6 bln stg in January, compared with last year's equivalent of -8.8 bln and expectations of -10.0 bln. January's surplus was the highest since the series began in January 1993, and came about despite the reclassification of London and Continental Railways Ltd, the company constructing the Channel Tunnel Rail Link, from the private sector to the public sector. A spokesman for the statistics office said January is traditionally a surplus month because quarterly corporation tax receipts coincide with self-assessment tax payments. On a year-on-year basis, income tax receipts increased 8.2 pct to 20.3 bln stg, while corporation tax receipts surged 51.7 pct to 10.8 bln
Though all the main revenue streams increased during the month, the spokesman identified the surge in corporation tax receipts as the main reason behind the record surplus in January. He said they were boosted by higher receipts and royalty payments from North Sea oil companies, partly as a result of higher oil prices. In addition, he said oil companies advanced their traditional April payments to January. Over the first 10 months of the year, the government's deficit stood at 29.8 bln stg, just below last year's equivalent of 30.0 bln in 2004/5. Today's news may give the Chancellor some chance of meeting his latest borrowing forecast and may even be enough to prevent another embarassing upward revision to his projection when he delivers his tenth budget on March 22
In his pre-budget report in December, Brown conceded that the government will have to borrow more than he previously expected. But he still forecast a year-on-year fall in public sector net borrowing to 37 bln stg in 2005/6 from last year's 39.5 bln. And despite the upward revision to upcoming borrowing projections, Brown insisted the government will meet its golden rule of balancing the budget, excluding investment, over the economic cycle, with a surplus of 16 bln. The current budget surplus, which strips out government investment, stood at a monthly record of 15.3 bln stg in January, compared with 12.3 bln stg in the same month last year. On a cumulative basis, the current budget deficit in the first 10 months of the year stood at 7.8 bln stg, against 15.0 bln last year
Even if he meets the golden rule in the current economic cycle, analysts still expect tax increases, or spending cuts, of around 10 bln stg over the next few years to bring the budget into balance over the next economic cycle, though they don't expect anything drastic in the upcoming budget
Elsewhere in today's release, an alternative measure of the public finances is also likely to provide the Treasury with some comfort as it prepares the budget. The public sector net cash repayment in January was 21.1 bln stg, compared with 14.7 bln stg last year and expectations of 17.0 bln. January's repayment was the highest since the series began in April 1984
On a cumulative basis, the public sector net cash requirement in the 10 months to January is 23.0 bln stg, compared with 24.5 bln last year. The statistics office also said net debt at the end of January stood at 442.7 bln stg. That is equivalent to 35.6 pct of GDP, up from 34.1 pct at the same time last year
Brown's second fiscal rule, the sustainable investment rule, requires net debt to be below 40 pct of GDP |
