Britain posts budget surplus of £8.8 billion in January

Britain posted its biggest budget surplus in seven years in January as a deadline for filing personal income-tax returns boosted payments to a record.

Income tax receipts rose an annual 6.1 per cent to £26.7 billion in January, with self-assessment surging almost 16 per cent, according to data published Friday in London.

The surplus excluding public-sector banks was £8.8 billion, which compared with economists’ forecast for £9 billion. Spending fell 0.1 per cent from a year earlier. In the first 10 months of the fiscal year, the deficit narrowed to £74 billion from £80 billion a year earlier.

The figures are the last before Chancellor of the Exchequer George Osborne announces his budget in March.

With the general election less than three months away, Prime Minister David Cameron is pushing the message that only his Conservative Party can be trusted to erase the deficit.

The Office for Budget Responsibility forecasts a shortfall of £91.3 billion, or 5 per cent of output, this fiscal year.

The Institute for Fiscal Studies said this month that Britain’s next government faces “painful decisions” about the scope of cuts needed.

Bonus Boost In January, total tax receipts excluding payments to the Treasury from the Bank of England’s Asset-Purchase Facility rose 4.2 per cent from a year earlier.

The central government cash balance last month was £18.3 billion. The boost to the government finances last month was largely due to the timing of bonus payments.

January was the last month for filing returns for the 2013-14 fiscal year, when bonus payments shifted to that period to take advantage of a cut in the levy on higher earnings.

Separate data on Friday showed retail sales fell 0.3 per cent in January from December, more than the 0.2 per cent decline economists had forecast. From a year earlier, sales rose 5.4 per cent.

Store prices plunged a record 3.1 per cent on the year, with the decline in prices at gas stations accounting for half of the drop. The deflator on food sales was minus 1.6 per cent, marking the biggest decline since 2002.

Bloomberg