Weak income, corporation taxes hit UK public finances

Friday 21 February 2014 11.52
Britain's public finances showed a £4.718 billion surplus in January, down from £6.035 billion a year ago
Britain's public finances showed a £4.718 billion surplus in January, down from £6.035 billion a year ago

Lower income tax and corporation tax receipts dragged Britain's public finances to a much smaller than usual seasonal surplus in January, as George Osborne prepares his annual budget.
              
A strong performance earlier in the financial year means the UK finance minister looks on track for public sector net borrowing to fall broadly as forecast
              
But the figures mean that Osborne is unlikely to have any large windfall to play with just over a year before elections in May 2015.
              
Other figures released by the Office for National Statistics today showed an unexpectedly sharp fall in retail sales in January, which suffered their biggest monthly decline since April 2012 after a strong December.

Sales were 1.5% down on the month and just 4.3% up on the year - both weaker than expected. The ONS said that weak supermarket sales were the main driver of the decline, and clothes sales dropped sharply too. 

Deficit reduction is a cornerstone of the economic policy of the UK government, which came to power in May 2010 when Britain's budget deficit was 11% of annual economic output - one of the highest for a major economy.
              
Britain's public finances, excluding financial sector interventions, showed a £4.718 billion surplus in January, down from £6.035 billion a year ago on a comparable basis - stripping out the effect of a transfer of debt interest from the Bank of England to the government.
              
Economists had forecast a surplus of £8.15 billion. Income and wealth tax receipts were 5.2% lower from a year ago and corporation tax was down around 6%.
              
January is a key month for Britain's public finances, as a disproportionate share of annual income tax and corporation tax is due, causing the budget to usually run a significant surplus for the month.
              
However, despite the weak performance this January, Britain's strong economic recovery in 2013 means that figures for the tax year that started in April 2013 are rosier.
              
For the year to date - stripping out the effect of cash transfers from Royal Mail and the Bank of England - the deficit was £90.7 billion, 4.2% lower than at the same point in 2013. 

The government's budget last March aimed for it to be 3.1% lower over the 2013/14 tax year as a whole.