UK public finances improve by less than expected in January

Government finances improved at the start of the year, buoyed by the typical January rise in tax receipts, albeit by slightly less than economists had penciled in.

Public sector net borrowing for the financial year-to date, excluding public sector banks, fell by £10.6bn to £66.5bn in the current financial year-to-date, according to the Office for National Statistics.

The financial year runs from (April 2015 to April 2016)

In January, public sector net borrowing excluding public sector banks was in a surplus to the tune of £11.2bn; that was £1.0bn more than a year ago and the most for that month since 2008.

Nonetheless, that was a tad lower than the -£12.5bn economists had anticipated.

Britain's net debt, excluding the public sector lenders, was left standing at £1,581.6bn, equivalent to 82.8% of gross domestic product; which was an increase of £52.7bn when compared with January 2015.

At this time last year net debt stood at 82.9% of GDP.

The so-called central government net cash requirement decreased by £19.7bn to £41.6bn in the current financial year-to-date compared with the same period in the previous financial year.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Thankfully, the Chancellor won’t have to announce even more austerity in the Budget on March 16 to remain on track to meet his fiscal rule of obtaining a budget surplus by the end of this parliament.

"A £10B margin for error was built into the Autumn Statement plans, and once again, the Chancellor will benefit from downward revisions to the debt interest forecasts, probably amounting to about £7B a year by the end of the decade. But recent poor borrowing figures effectively mean the Chancellor has no spare cash to dole out in the Budget. The fiscal squeeze therefore will tighten this year and next as planned, throttling the economic recovery of momentum."