THE GOVERNMENT’S deficit reduction plan is well ahead of schedule, with an unexpectedly large surplus in January bringing down the year’s projected borrowing figures, data from the Office for National Statistics (ONS) showed yesterday.
The surplus hit £7.75bn in the month, up from £5.20bn last January, and taking borrowing in the financial year so far to £93.5bn – down £15.7bn on the same period of last year.
Such a fall in the deficit puts full-year borrowing on track to beat the Office for Budget Responsibility’s (OBR) £127.1bn forecast by £7bn.
January’s receipts are the highest each year, and revenues rose to £60.89bn, up 2.77 per cent from £59.25bn in January 2011, while current spending increased three per cent on the year to £50.72bn in January.
Although this year’s borrowing will be lower than forecast, economists are urging chancellor George Osborne to resist the urge to spend the £7bn extra at next month’s budget.
“The recent move by Moody’s rating agency to lower the UK’s credit rating outlook to negative from stable has brought to the fore the UK’s vulnerable position and the importance of fiscal sustainability,” said Barclays Capital’s Blerina Uruci.