‘The weak result was mainly due to a change in the way that the ONS measures corporation tax revenue.’ – Scott Bowman, Capital Economics
Britain’s public sector budget surplus expanded less than expected in January, official figures revealed on Tuesday. According to the Office for National Statistics, the UK public sector’s net borrowing, which excludes state-owned banks, registered a budget surplus increase to £9.4B in the first month of 2017, the highest figure since 2000, compared to the £9.1B a year ago. Nonetheless, the January surplus growth was worse than analysts’ expectations for a £14.7B hike. Moreover, borrowing requirements for the first 10 months of 2016-2017 fiscal year decreased to £49.3B from £62.9B. That was the lowest 10-month budget deficit in nearly nine years. Furthermore, the ONS said net debt rose to 85.3% of GDP from 83.4% recorded in the preceding year. Due to certain changes in methodology of the latest data release, the report also revealed there was a £2.1B transfer from the BoE Asset Purchase Facility Fund. Overall, the confidence in the near-term budget outlook is likely to appreciate due to solid revenue growth.
Separately, the BoE Governor Mark Carney, speaking on the February inflation report, pointed out that inflation is entirely affected by the currency, while rates are set to rise more quickly than expected.