Surge in receipts helps PSBR

Kenneth Clarke's claim to sound management of the economy was boosted yesterday by news of an unexpectedly large surplus of government receipts over spending last month.

Economists said the pounds 5.8bn repayment of debt in January, nearly twice as much as expected, might take total government borrowing below its target this financial year. Tax revenues were running ahead of the Budget forecast, while government spending was not growing as fast as many experts had feared.

The Chancellor said: "It shows we are certainly going to hit our target. We might do even better, although I won't count my chickens. We'll wait to see what happens at the end of the year."

The surprise on the government finance front, along with confirmation from the Governor of the Bank of England on Monday that the strong pound meant he was now seeking only a quarter- rather than a half-point rise in interest rates, combined to knock four pfennigs off sterling's exchange rate yesterday. It closed at DM2.7085, while its index against a range of currencies fell 1.2 to 96.8.

Analysts in the City predicted an improvement in the state of the public finances in the coming months. "The outlook is reasonably good with growth so strong," said Kevin Gardiner, an economist at Morgan Stanley.

However, many remain concerned about the Government's financial position. John O'Sullivan at NatWest Markets said: "The recovery started five years ago and the deficit is still falling slowly. Should we not be closer to balance at this stage?"

Liberal Democrat spokesman Malcolm Bruce pressed home the same message. "The reality is that at the moment the public sector borrowing requirement [PSBR] is exceeded by the amount of interest we pay on the national debt," he said.

In an interview on BBC radio, Mr Clarke made clear the Conservatives' hope that the Government's economic record will be a vote-winner.

"If there are people out there who think New Labour or the Liberal Democrats could do better than that, good luck to them. But I actually think when the time comes they will think very carefully about plunging out of where we are now into a risk of that kind," he said.

High tax revenues explained the surprise pounds 5.8bn repayment in January. One element, a surge in VAT receipts, was expected after a lower-than- normal figure in December. The payment on account system is leading to a concentration on VAT payments into the first month of each quarter.

Even so, growth in VAT revenues has been 15 per cent in the financial year to date, in contrast to the unaccountably low receipts the previous year.

Corporation tax revenues, which are always strongest in October and January, were a little better than the Treasury had expected. They are up nearly 11 per cent year-on-year and have already overtaken the full-year forecast contained in November's Budget.

Comment, page 19

Start your day with The Independent, sign up for daily news emails
Voices
voices
News
general electionThis quiz matches undecided voters with the best party for them
Arts and Entertainment
Keira Knightley and Matthew Macfadyen starred in the big screen adaptation of Austen's novel in 2005
tvStar says studios are forcing actors to get buff for period roles
News
Prince William and his wife Catherine, Duchess of Cambridge show their newly-born daughter, their second child, to the media outside the Lindo Wing at St Mary's Hospital in central London, on 2 May 2015.
news
ebooks
ebooksA celebration of British elections
  • Get to the point
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

Ashdown Group: Trainee Consultant - Surrey/ South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Ashdown Group: Trainee Consultant - Surrey / South West London

£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...

Recruitment Genius: Claims Administrator

£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...

Recruitment Genius: Senior SEO Executive

£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...

Day In a Page

Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power
Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

The price to be paid for challenging the rule of extremists

A revolution now 'consuming its own children'
Welcome to the world of Megagames

Welcome to the world of Megagames

300 players take part in Watch the Skies! board game in London
'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

Charlotte Gainsbourg on 'Nymphomaniac'

Starring in one of the most explicit films ever
Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

Robert Fisk in Abu Dhabi

The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

Vince Cable exclusive interview

Charging fees for employment tribunals was 'a very bad move'
Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

Iwan Rheon is returning to his Welsh roots

Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

It's time for my close-up

Meet the man who films great whites for a living
Increasing numbers of homeless people in America keep their mobile phones on the streets

Homeless people keep mobile phones

A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before