Rebound in public finances helps give Brown a buoyant beginning to the year

Gordon Brown was given his best start to a fiscal year since he became Chancellor yesterday, according to official figures showing the public finances unexpectedly swung into the black in April.

But revisions to earlier figures put borrowing for the year to March even further above the Chancellor's March Budget forecast than initially thought.

Dominic Walley, at the Centre for Economics and Business Research, said: "Although this month's headline figure is better than expected, the significant creep upward revisions in historic borrowing will take the edge off any good news."

In a mixed batch of data for the Chancellor, the Office for National Statistics said the Government repaid debt last month, confounding forecasts of a deficit. Public sector net borrowing, the Government's preferred measure that smoothes out volatile months, recorded a surplus of £1.8bn compared with economists' forecasts of an £800m deficit. This boosted the measure of the current budget surplus - the tool for gauging Mr Brown's cherished "golden rule" - to £3.0bn compared with £1.7bn in the same month last year.

This was the best April since modern records began in 1998, when the current budget assumed greater importance under Mr Brown's new fiscal rules.

The higher surplus was achieved despite an accounting change that shifted North Sea oil revenue payments to January from April, which meant corporation tax revenues were 6 per cent lower than last year.

The ONS said excluding oil, corporation tax receipts were up on a year ago. Meanwhile, VAT receipts were up 4.7 per cent and income tax 3.7 per cent ahead.

Howard Archer, at the analysts Global Insight, said: "VAT receipts add to the evidence that consumer spending has picked up recently. This boosts the Chancellor's chances of reducing the PSNB this year - but there is still a long way to go."

The March Budget pencilled in a PSNB deficit of £36.0bn, falling to £23bn by 2011. However some analysts said the figures did little to ease their worries over the long-term outlook for the public finances.

Jonathan Loynes, at Capital Economics, said: "Borrowing remains undesirably high and significant further tax rises will ultimately be required to meet the fiscal rules convincingly."

The concern was amplified by revisions that added £1bn to the current deficit and the PSNB for 2005-06 because of an unidentified overspend. It means the current deficit, which measures day-to-day non-investment spending, was £11.8bn last year rather than £10.4bn. ONS figures showed that despite the increase, the Government was still meeting the golden rule to balance the current budget over the economic cycle by 0.77 per cent of GDP.

Separate figures showed homebuyers' appetite for borrowing waned in April. Net mortgage lending by the major banks slowed to £5bn last month from £5.5bn in April, the British Bankers' Association said.

The Council of Mortgage Lenders said lending fell 12 per cent between March and April, although last month's £25.1bn of lending was the highest on record for an April.

Meanwhile Paul Tucker, a member of the Bank of England's Monetary Policy Committee, said business investment was not as strong as in previous economic cycles. "The current business investment recovery looks much weaker than those in the past," he told a conference of corporate treasurers held in Wales.

PROMOTED VIDEO
Arts and Entertainment
booksPhotographer Richard Young has been snapping celebrities at play for 40 years - but he says it wasn’t all fun and games...
News
i100
Sport
Aguero - who single-handedly has kept City's Champions League dreams alive - celebrates his dramatic late winner
footballManchester City 3 Bayern Munich 2: Argentine's late hat-rick sees home side snatch vital victory
News
Muhammad Ali pictured in better health in 2006
peopleBut he has enjoyed publicity from his alleged near-death experience
Arts and Entertainment
Tony breaks into Ian Garrett's yacht and makes a shocking discovery
TVReview: Revelations continue to make this drama a tough watch
News
news
News
ebooksNow available in paperback
News
peopleSinger tells The Independent what life is like in rehab in an exclusive video interview
News
The assumption that women are not as competent in leadership positions as men are leads to increased stress in the workplace
science... and it's down to gender stereotypes
Arts and Entertainment
Inner sanctum: Tove Jansson and friends in her studio in 1992
booksWhat was the inspiration for Finland's most famous family?
News
i100
Arts and Entertainment
Singer songwriter Bob Dylan performs on stage
films
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Citifocus Ltd: Product Development - Asset Management

£Attractive: Citifocus Ltd: High calibre individual with significant product d...

Citifocus Ltd: Credit Ratings - Banking Sector

£Negotiable: Citifocus Ltd: Leading global bank seeks experienced credit analy...

Citifocus Ltd: Economic Crime Investigation & Analysis

£Attractive Package: Citifocus Ltd: High calibre individual with a high degree...

Citifocus Ltd: Snr Risk Analyst - Capital & Liquidity

£Attractive: Citifocus Ltd: High calibre individual with superior academics an...

Day In a Page

Homeless Veterans Christmas Appeal: Drifting and forgotten - turning lives around for ex-soldiers

Homeless Veterans Christmas Appeal: Turning lives around for ex-soldiers

Our partner charities help veterans on the brink – and get them back on their feet
Putin’s far-right ambition: Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU

Putin’s far-right ambition

Think-tank reveals how Russian President is wooing – and funding – populist parties across Europe to gain influence in the EU
Tove Jansson's Moominland: What was the inspiration for Finland's most famous family?

Escape to Moominland

What was the inspiration for Finland's most famous family?
Nightclubbing with Richard Young: The story behind his latest book of celebrity photographs

24-Hour party person

Photographer Richard Young has been snapping celebrities at play for 40 years. As his latest book is released, he reveals that it wasn’t all fun and games
Michelle Obama's school dinners: America’s children have a message for the First Lady

A taste for rebellion

US children have started an online protest against Michelle Obama’s drive for healthy school meals by posting photos of their lunches
Colouring books for adults: How the French are going crazy for Crayolas

Colouring books for adults

How the French are going crazy for Crayolas
Jack Thorne's play 'Hope': What would you do as a local politician faced with an impossible choice of cuts?

What would you do as a local politician faced with an impossible choice of cuts?

Playwright Jack Thorne's latest work 'Hope' poses the question to audiences
Ed Harcourt on Romeo Beckham and life as a court composer at Burberry

Call me Ed Mozart

Paloma Faith, Lana del Ray... Romeo Beckham. Ed Harcourt has proved that he can write for them all. But it took a personal crisis to turn him from indie star to writer-for-hire
10 best stocking fillers for foodies

Festive treats: 10 best stocking fillers for foodies

From boozy milk to wasabi, give the food-lover in your life some extra-special, unusual treats to wake up to on Christmas morning
Phil Hughes head injury: He had one weakness – it has come back to haunt him

Phil Hughes had one weakness – it has come back to haunt him

Prolific opener had world at his feet until Harmison and Flintoff bounced him
'I have an age of attraction that starts as low as four': How do you deal with a paedophile who has never committed a crime?

'I am a paedophile'

Is our approach to sex offenders helping to create more victims?
How bad do you have to be to lose a Home Office contract?

How bad do you have to be to lose a Home Office contract?

Serco given Yarl’s Wood immigration contract despite ‘vast failings’
Green Party on the march in Bristol: From a lost deposit to victory

From a lost deposit to victory

Green Party on the march in Bristol
Putting the grot right into Santa's grotto

Winter blunderlands

Putting the grot into grotto
'It just came to us, why not do it naked?' London's first nude free runner captured in breathtaking images across capital

'It just came to us, why not do it naked?'

London's first nude free runner captured in breathtaking images across capital