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Government records £9.4bn surplus in January

Chancellor Philip HammondImage copyright Getty Images

Government finances recorded a £9.4bn in surplus in January, £0.3bn higher than the same month last year.

Boosted by self-assessment tax receipts, January is typically a strong month for government finances.

For the year-to-date, public sector net borrowing stands at £49.3bn, the lowest since the comparable period of 2008.

Philip Hammond presents his budget on 8 March and economists say strong tax receipts should cut the nation’s borrowing requirement for 2016-17.

The Chancellor will base his budget calculations on updated figures on growth and borrowing supplied by the Office for Budget Responsibility (OBR).

A Treasury spokesperson said in a statement: “We remain committed to returning the public finances to balance and building on our progress in reducing the deficit from 10% to 4% of GDP over the last six years. Next month, the chancellor will deliver his spring Budget based on updated forecasts from the OBR.”

‘Rare good news’

Earlier this month, the respected economic think tank, the EY Item Club, said that borrowing for the 2016-17 financial year could be revised down to £65bn from the £68bn forecast made in the Autumn Statement.

“The OBR is likely to deliver some rare good news to the Chancellor by revising down its forecast for public sector net borrowing in the current fiscal year,” the EY Item Club said in its budget preview.

“Unusually, tax revenues have been performing better than expected in recent months,” it said.

Growth in tax receipts has been “fairly steady” since June, agrees Scott Bowman, UK Economist at Capital Economics.

“We think borrowing should come in significantly below the OBR’s current £68bn forecast for the 2016-17 fiscal year,” he said.

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