Surplus boosts borrowing figures
Hopes the Government will hit this year's borrowing forecasts have been boosted after figures revealed it enjoyed its highest surplus for four years in January.
The Office for National Statistics said the Government recorded a net surplus of £7.8 billion excluding interventions such as bank bailouts, up £2.5 billion on the previous year and its biggest figure since January 2008.
January is traditionally a bumper month for tax returns, which were helped by its bank levy, while expenditure was brought down by the Government's ongoing austerity measures.
In a further boost to Chancellor George Osborne, net borrowing in the previous nine months of the year was revised down by £2.1 billion to £93.5 billion after local government spending was lower than previously thought.
The better than expected figures will boost hopes the Government will beat targets set by the Office for Budget Responsibility (OBR) to reduce its borrowing to £127 billion this financial year.
January's surplus helped push the Government's underlying net debt back below the £1 trillion mark, to £988.7 billion. But this figure is expected to return to fresh highs in the coming months. Net debt is still 63% of GDP, and is up from £869.1 billion a year ago.
A Treasury spokesman said: "Our credible deficit plan is working and bringing Government borrowing down - so far this year it is £16 billion lower than in the same period last year. It is the deficit plan, and its successful implementation, that is keeping interest rates at record lows for families and businesses and helping to support the recovery."
January's figures are key because they are the last to be revealed before the Budget, which will be published by the Chancellor on March 21 and will give a final chance to judge whether the Government is on track to reduce the annual deficit.
Economists fear that the Government will find it harder to meet its forecast from the OBR in coming months as the UK's economy teeters on the brink of recession and it faces bigger benefits bills amid rising unemployment. Credit rating agency Moody's recently put the UK on negative outlook, which means it is more in danger of losing its cherished AAA rating, as slowing growth due to public sector cuts make it harder to bring its deficit under control.
Shadow chief secretary to the Treasury Rachel Reeves, speaking to the IPPR think-tank, said: "The Chancellor might claim today's borrowing figures show his plans are on track, but he is only on track for targets which have already been revised up by a staggering £158 billion. This is extra borrowing to pay for the costs of economic failure - slower growth and higher unemployment - rather than to support the economy through difficult times."