UK public sector borrowing in £9.4bn surplus last month

UK public sector net borrowing was in surplus by £9.4bn in January – a key month for income tax receipts – up a touch from £9.1bn in the same month a year ago.

This was the highest January surplus since 2000, and although it came in worse than consensus estimates for a £14bn surplus, it leaves Chancellor Philip Hammond on track to meet his 2016/2017 fiscal targets.

For the current financial year to date, public sector net borrowing fell by £13.6bn to £49.3bn compared with the same period in the previous financial year, which is the lowest YTD borrowing since the financial year ending January 2008.

Meanwhile, the government’s total debt pile rose to £1.7trn at the end of January, which is a £91.7bn increase since the end of January 2016.

Self-assessed income tax and capital gains tax receipts increased by £2bn to £19.8bn in January 2017 compared to the same month a year ago, which is the highest January on record.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Borrowing remains on track to undershoot the OBR’s Autumn Statement forecast, despite January’s smaller-than-expected surplus.

“The ONS has decided this month to shift to recording corporation tax receipts when the economic activity that generated them occurred, rather than when they were received by the Exchequer. Partly as a result, borrowing in the first nine months of the fiscal year was revised down by nearly £4bn.”

Howard Archer, chief UK and European economist at IHS Global Insight, said: “Very pleasing news for Chancellor Philip Hammond ahead of the 8 March budget as the public finances saw an improved surplus in January compared to a year earlier and looks poised to substantially undershoot the revised 2016/17 fiscal target contained in November’s Autumn Statement.”