The Government finances remained in deficit at the end of February, despite widespread expectations of a surplus.
At the end of February, the excess of Government spending over revenue of £11 million compared with a deficit of £205 million in the same period in 1997.
Economists forecasts ranged from just over a balanced position to a surplus of £100 million.
The Department of Finance said the deficit was mostly the result of timing factors in debt servicing. 'It was not unexpected and is broadly in line with the Department's own profile,' a spokeswoman said. The full-year target, so far, is a deficit of £89 million.
Dr Dan McLaughlin, chief economist at ABN Amro, said the reason for the shortfall was a 'particularly big jump' in central fund spending. This part of the Government's spending budget is made up of payments to service the national debt and payments to the EU as well as payments to the judiciary.
He added that there had been no slowdown in tax revenue. Revenue is still growing at 9.6 per cent, compared with a Budget target of a 6 per cent rise. Overall, he believed that the Government finances were still heading for a surplus this year. Only last week the Government increased its projections for a general government surplus from 0.3 per cent to 0.5 per cent this year.
'Revenue is set to exceed targets once again and if the Government wants to, it will be able to have a large surplus this year of £400 million to £500 million,' he said.
'But like last year it will probably take the opportunity to increase spending again. It may well make substantial provisions for army deafness claims.'
Total tax receipts in the first two months of the year came to £2.15 billion, from £1.98 billion a year earlier. Miscellaneous revenue came to £23.96 million from just £5.14 million last year, while other receipts totalled £53.7 million from £37.7 million.
On the spending side, central fund issues came to £469.9 million from £428.7 million, and supply services issues, or day-to-day spending, came to £1.74 billion from £1.8 billion.
