Seasonal tax inflows lift UK budget surplus to record in January

By Thomson Reuters Feb 21, 2024 | 1:14 AM

By David Milliken and Suban Abdulla

LONDON (Reuters) -Britain recorded its highest ever budget surplus in January, official figures showed on Friday, due to record seasonal tax inflows, although the broader fiscal picture remains tough as finance minister Jeremy Hunt prepares his annual budget.

Britain recorded a budget surplus of 16.7 billion pounds ($21.1 billion) in January, the Office for National Statistics said on Wednesday, the highest since records began although slightly below economists’ 18.7 billion pound forecast in a Reuters poll.

Britain’s public finances typically run a surplus in January, unlike other months, as annual income tax payments are due that month. Total central government tax receipts hit a record 90.8 billion pounds, up from 87.9 billion a year earlier.

Since the start of the financial year in April 2023, public borrowing has totalled 96.6 billion pounds, the ONS said, 3.1 billion pounds less than during the same period of the 2022/23 financial year.

But net debt on the government’s preferred measure, which excludes public sector banks and the Bank of England, was 2.418 billion pounds or 88.1% of gross domestic product – down slightly from December but up from 85.0% of GDP a year ago.

“The policy choice lies between fiscal pragmatism and a stated desire to cut taxes,” said Michal Stelmach, senior economist at KPMG UK.

Hunt will present his annual budget on March 6, and wants to cut taxes in order to boost the Conservative Party’s popularity before the national election Prime Minister Rishi Sunak expects to call later this year.

The Conservatives are heavily trailing the opposition Labour Party in opinion polls, and received a blow from official figures last week which showed the economy had fallen into a shallow recession in the second half of last year.

($1 = 0.7924 pounds)

(Reporting by Suban Abdulla and David Milliken; editing by William James)