UK budget turned out to be unexpectedly surplus in Jan
2023.02.21 09:23
UK budget turned out to be unexpectedly surplus in Jan
By Ray Johnson
Budrigannews.com – Due to strong income tax receipts, Britain’s government ran a budget surplus in January, giving finance minister Jeremy Hunt a little more leeway as he prepares to present a budget statement next month.
The Office for National Statistics (ONS) reported on Tuesday that Britain’s public finances had a surplus of 5.42 billion pounds ($6.51 billion) last month because millions of Britons pay income tax.
Net borrowing, excluding state-owned banks, was estimated to be 7.9 billion pounds in a survey of economists conducted by Reuters.
As a result of the surplus, borrowing for the first ten months of the fiscal year 2022/23 totaled 117 billion pounds. This was a significant shortfall by historical standards, but it was approximately 30 billion pounds less than the government’s forecasters had anticipated.
Ruth Gregory, deputy chief UK economist at consultancy Capital Economics, commented on the January surplus, “This suggests that the Chancellor will have some wiggle-room in the budget to fund near-term tax cuts and/or spending rises.”
Within his Conservative Party, Hunt has been under pressure to speed up Britain’s slow economic growth and cut taxes. Despite the fact that a separate survey of businesses published on Tuesday was significantly stronger than anticipated, the Bank of England and other forecasters have stated that a recession is probably already in progress.
Workers in the public sector have launched a wave of industrial action, and the government is fighting back against their demands for pay raises.
The general secretary of the Trades Union Congress, Paul Nowak, stated, “The government is running out of excuses.” “Jeremy Hunt needs to come out of hiding and contribute to breaking the deadlock on pay in the public sector.”
Hunt stayed true to his message about the need to deal with Britain’s debt, which currently amounts to just under 2.5 trillion pounds, or almost 99% of the country’s GDP.
According to a statement released by Hunt, “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.”
Gregory warned that forecasters at the Office for Budget Responsibility were likely to lower their estimates of Britain’s potential economic growth rate, which would limit Hunt’s March 15 giveaways.
The highest January total ever recorded was 6.7 billion pounds of interest due on index-linked government bonds, according to Tuesday’s figures, which are not adjusted for inflation.
However, they also demonstrated that self-assessment income tax receipts were at their highest level since monthly records began in 1999, reaching 21.9 billion pounds—5.5 billion pounds more than they had been the previous year.
According to Investec economist Philip Shaw, the robust tax revenues may decrease this year as the economy continues to struggle under the weight of high inflation, but Hunt may be spared the expense of maintaining costly state support for energy bills as international prices decline.
The public authority spent in excess of 10 billion pounds on its energy support for families in January, while it likewise paid 2.3 billion pounds to the European Association to resolve a disagreement regarding customs obligations.
“It is still relatively early days, but it is possible to envisage events playing out where borrowing falls significantly below expectations, facilitating at least some tax cuts prior to a 2024 election,” Shaw stated. “It is still relatively early days.”
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