Record surplus delivers pre-Brexit boost for Hammond

(c) Sky News 2019: <a href="">Record surplus delivers pre-Brexit boost for Hammond</a>

Britain's public finances delivered a record surplus last month in a boost for Chancellor Philip Hammond ahead of next month's pre-Brexit spring statement.

The surplus of £14.9bn - meaning the Treasury received more money than it spent - was £5.6bn greater than the same month last year, according to the Office for National Statistics (ONS).

That was the highest since monthly records began in 1993 and beat economists' forecasts for £10bn.

Analysts said it would leave the chancellor scope for more spending to boost growth in the event of a no-deal departure from the European Union.

They said the latest figures put the government on course to undershoot its borrowing target of £25.5bn for the 2018/19 fiscal year to the end of March.

January is typically a strong month for public finances because they include the impact of self-assessment income tax and capital gains tax receipts.

The latest data means that borrowing for the 10 months of the fiscal year to date stands at £21.2bn - £18.5bn less than over the same period a year before and the lowest for 17 years.

Mr Hammond is due to give a half-yearly budget update to MPs (BSE: MPSLTD.BO - news) on 13 March, just over two weeks before Britain is due to leave the European Union.

The ONS said January's data showed strong increases for income tax and capital gains tax revenues, as well as for taxes on corporate profits.

However receipts from property transaction duties fell, reflecting a slower housing market.

Howard Archer, chief economic adviser to the EY ITEM Club, said the figures provided a "much-needed welcome boost for the chancellor as he faces a worrying backdrop to his spring statement" with growth forecasts likely to be downgraded.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Public sector borrowing now likely will come in slightly below the OBR's [Office for Budget Responsibility] full-year Budget forecast, helping to maintain the fiscal headroom that the chancellor could draw on in future to stimulate the economy, while still meeting his targets."

Last week, MPs criticised the chancellor's target of balancing the books as having "no credibility" after he announced a £20bn a year funding boost for the NHS in October's budget.