Huge tax revenue helped the government into the black last month, giving Jeremy Hunt a pre-Budget boost.
Surprising experts, the UK government reported a surplus of £5.4 billion in January, partly as a result of a record $21.9 billion in revenue from self-assessment tax returns.
Increased interest payments on the debt mountain, “significant expenditure” on energy assistance programs, and a large £2.3 billion settlement with the EU after the UK lost a long-standing customs battle were all offset by that.
The surplus was £5 billion more than the Office for Budget Responsibility had forecast in the autumn, but it was still £7.1 billion less than January 2022. During the month, experts had predicted borrowing of £7.8 billion.
The better-than-expected results may increase pressure on the chancellor to lower taxes when he presents his budget next month. But Mr. Hunt again dismissed the notion this morning, asserting that it is essential to “bring debt down.”
With debt at its highest level since the 1960s, he added, “It is crucial we keep to our goal to decrease debt over the medium-term.” “We are rightfully investing billions now to help individuals and companies with the repercussions of increasing prices.”
The amount spent on debt interest must be reduced in order to preserve our public services, which will necessitate some difficult decisions.
The amount of self-assessed income tax revenues for the month of £21.9 billion was the largest monthly total since similar data collection began in 1999.
Due to the energy assistance provided to consumers and companies owing to skyrocketing costs, this somewhat offset rising expenditure.
About £8 billion in payments to energy providers were made in January as a consequence of government price limit programs.
Also, it was announced that an additional £1.9 billion was spent on the fourth round of payments for the energy bills assistance program, which paid families £400 over the course of six months to help them reduce their expenses.
The debt is at its highest level since the 1960s, therefore it is crucial that we keep to our strategy to decrease debt over the medium term, according to Chancellor Jeremy Hunt. “We are appropriately investing billions now to assist individuals and companies with the implications of increasing prices,” he said.
The amount spent on debt interest must be reduced in order to preserve our public services, which will necessitate some difficult decisions.
In spite of the fact that today’s numbers indicate a smaller January surplus than last year, borrowing was actually lower than anticipated in November, according to Isabel Stockton, Senior Research Economist at the esteemed IFS think tank.
The good news for the Chancellor is that we may anticipate lower-than-anticipated debt interest expenditure to continue, as well as lower-than-anticipated costs for the pricey energy assistance programs.
The latter will only provide the Exchequer with a temporary saving.
“The OBR’s assessment of the outlook for growth will be significantly more significant than these modifications when they create a fresh set of predictions for the next March Budget,” the OBR said.
“The Chancellor’s first Budget will not be an easy one to manage,” the Chancellor said, “with public services under strain, demands to reduce taxes, and next to no wiggle room against the pledge to have debt reducing as a percentage of national income in five years time.”
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