UK tax receipts boost public finances

Published February 21st, 2023 - 08:46 GMT
UK surplus
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ALBAWABA — The United Kingdom’s government finances recorded a stronger surplus of over 5 billion British pound sterling last month, official data showed on Tuesday, as tax receipts boosted the public finances.


Figures from the Office for National Statistics showed that the U.K.’s public finances were in surplus by 5.4 billion GBP in January, beating Office for Budget Responsibility forecasts by 5 billion GDP as workers and companies settled their tax bills.


The data, coming ahead of a key budget update next month, suggests the public finances are in better shape than expected, which could allow Jeremy Hunt, chancellor of the exchequer, more room to help struggling households to further ease the cost-of-living crisis while drawing up next month’s budget.


U.K. borrowing soared over the year on support schemes to help the country cope with rocketing energy bills.


"We are rightly spending billions now to support households and businesses with the impacts of rising prices but with debt at the highest level since the 1960s, it is vital we stick to our plan to reduce debt over the medium term," Hunt said in a statement. "Getting debt down will require some tough choices, but it is crucial to reduce the amount spent on debt interest so we can protect our public services."


Isabel Stockton, a senior research economist at the Institute for Fiscal Studies, told Bloomberg the "good news for the chancellor is that we can expect lower-than-expected spending on debt interest to persist, and the cost of the expensive energy support schemes also to end up lower than forecast. The latter will only represent a short-term saving for the exchequer".


The U.K.'s fiscal year runs to the start of April, and to date the government has borrowed almost 31 billion GBP less than it had forecast for 2022/23.


The current forecast of a budget deficit in the range of 177 billion GBP may be trimmed back when the budget is released on March 15. 


Public sector net debt hit 2.49 trillion GBP, which was 98.9 percent of national output, with the debt-to-GDP ratio at levels last seen in the early 1960s.


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