Expected fall in January tax revenue will give Chancellor a pre-Budget headache
The first indications that George Osborne's deficit reduction timetable is slipping could come this week with the release of the official public borrowing figures for January.
Some economic analysts forecast that the public sector net borrowing statistics for last month, due on Tuesday, will show a fall in tax revenues on similar levels to a year ago. Philip Shaw of Investec said: "We think it's likely the figures will be less good than in January last year."
January is normally a bumper month for tax revenue, as thefigures are boosted by self-assessment income tax returns, plus capital gains and corporation tax payments. In January 2011, the ONS registered a surplus of £5.1bn.
Tax revenues in the month were £59bn, £10bn higher than the next best month of the fiscal year. Investec are forecasting a fiscal surplus for the Government this January of £4.7bn – a worsening of around £500m on the position of a year earlier.
Other analysts emphasised the importance of this week's figures for forming a judgement over the outlook for the public finances. "With January being such an important month for receipts, if that [positive] trend isn't maintained it will cause the Chancellor some headaches in the run up to the Budget," said Sam Hill, a strategist at RBC Capital Markets. "Not only will it mean savings coming from elsewhere to keep things on track into 2012-13," he added, "but it will also spark another round of criticism from those who say the Government's austerity strategy is self defeating."
However, Mr Hill also said if tax revenues remain buoyant the Chancellor will gain a political fillip after the knock delivered by the threat to the UK's credit rating last week. "He would surely use that as a rebuttal of the concern expressed in Moody's decision to put the UK's outlook to negative."
- 1 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 2 Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
- 3 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
- 4 A bottle of wine a day is not bad for you and abstaining is worse than drinking, scientist claims
- 5 Isis publicly behead man in Syrian town square for 'insulting Allah' as he screams for help
Michelle Obama highlights harsh restrictions faced by Saudi women after meeting King Salman without wearing a headscarf
Amal Clooney gives excellent response to fashion question at European Court of Human Rights
Sir David Attenborough interview: The one question about life that still baffles him
Isis publicly behead man in Syrian town square for 'insulting Allah' as he screams for help
One spelling error costs Companies House up to £9 million after being sued for ruining business
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
9 reasons Greece's experiment with the radical left is doomed to failure
Greece elections: Syriza and EU on collision course after election win for left-wing party
British Muslim school children suffering a backlash of abuse following Paris attacks
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
iJobs Money & Business
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
£25000 - £35000 per annum: Recruitment Genius: A Technical Report Writer is re...
Competitive salary & benefits!: MBDA UK Ltd: MBDA UK LTD Indirect Procurement...
£16500 - £16640 per annum: Recruitment Genius: This fast growing Finance compa...