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The UK has posted its largest budget surplus for a January in at least 30 years, giving a final healthcheck on the public finances ahead of next month’s budget.
There was a surplus of £16.7bn last month, new data from the Office for National Statistics shows – which is the largest surplus since monthly records began in 1993, and twice as large a surplus as a year ago.
January is typically a good month for the public finances, as it includes the deadline for self-assessment taxpayers to pay what they owe.
The ONS explains: "Each January tax receipts are always higher than in other months, owing to receipts from self-assessed taxes; combined self-assessed income and capital gains tax receipts were £33.0bn, £1.8bn less than a year earlier."
City economists had expected an even larger surplus, though, of £18.7bn.
Central government tax receipts rose by £3.9bn year-on-year, to £111.4bn in January, lifted by a rise in takings from corporation tax, income tax and value added tax (VAT).
Self-assessed (SA) tax receipts were a little lower than last January – although some of this money may show up in February’s public finances.
On the other side of the national balance sheet, net social benefits rose by £3.4bn in January to £23.7bn.
The ONS explains: "In recent months we have seen large increases in benefit payments largely because of inflation-linked benefits uprating and cost-of-living payments."
Encouragingly, the interest payment on the national debt also fell, due to the drop in inflation over last year (used to set the repayment on index-linked bonds).
Today’s data also shows that the UK has run up a deficit of £96.6bn so far this financial year.
That’s £9.2bn less than forecast by the Office for Budget Responsibility (OBR), which may give chancellor Jeremy Hunt some wriggle room for tax cuts in the Budget.
But the Resolution Foundation is warning this morning that any tax giveaways next month will be squeezed in between £20bn of tax increases already implemented and a further £17bn of hikes pencilled in for after polling day.
Calling this a “tax sandwich”, Resolution lay out what lies ahead for taxpayers: "Tax rises of around £20bn were introduced in 2023-24, including freezing personal tax thresholds and increasing corporation tax.
"Highly unusually, the government has also pre-announced major tax rises for after the next election, with a further £17bn of tax rises set to come into effect in the next parliament, including a spring 2025 stamp duty rise and three extra years of tax threshold freezes.
"History, and significant spending cuts pencilled in for after the election, tell us that further tax rises may well be announced after polling day – as we saw in 1993, 1998, 2011, 2016 and 2020."
Also coming up today
Financial markets are bracing for two important events this evening (UK time). The US central bank will release the minutes of its last monetary policy meeting, where it left interest rates at a 23-year high; they’ll be strutinised for hints as to when cuts may come.
And after Wall Street closes, chip giant Nvidia will release its latest financial results. Given Nvidia’s share pruce has more than tripled in the last year, lifted by AI enthusiasm, the stakes are high.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, says Nvidia’s numbers will be the “most expected earnings of the quarter today”, adding: "Nvidia is expected to announce a sales revenue of around $20bn in the Q4 and earnings per share of $4.60. The numbers are huge if you think that sales were worth around $6bn, and EPS was just 88 cents a year ago.
"We are talking about a more than 200% sales growth – which, no matter if the company meets expectations or not – is huge. But of course, the price action was big too. Nvidia is up by more than 400% since the beginning of 2023. This is why any correction could be massive."
The agenda
• 7am GMT: UK public finances for January
11am GMT: CBI industrial trends survey of UK manufacturing
• 2pm GMT: Bank of England policymaker Swati Dhingra gives a speech on ‘Recent BoE projections – key factors/judgements’
• 2.15pm GMT: Treasury committee to question forecasters about economic modelling ahead of spring budget
• 3pm GMT: Eurozone consumer confidence report for February
• 7pm GMT: Federal Reserve releases minutes of its latest FOMC meeting
We’ll be tracking all the main events throughout the day ... |
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