Surprise surplus of £1.39 billion in April: ONS

Surprise surplus of £1.39 billion in April: ONS

	Published : Sun, 21 May 2006 10:35 By : Cedric Benson Print this Story

LONDON - The Office for National Statistics revealed today that the public sector recorded its highest surplus since April 2000 with income tax and VAT payments boosting the treasury by £1.39 billion last month. This figure was over and above what analysts had predicted.

There were expectations of £700 million deficit, but the surge in tax payments seems to have done the trick. The surplus was also much better than the £859 million surplus recorded in April 2005. The Treasury, which has been under the cosh for the level of public borrowing said the new figure was "meeting our fiscal rules". The ONS said public borrowing was £38.9 billion more than the £37.1 billion forecast by the Treasury. Chancellor of the Exchequer Gordon Brown has predicted that the borrowing will drop to £36 billion in the current fiscal year.

Analysts felt that the surplus was a good start for Mr Brown. "The Chancellor has got off to a good start for the fiscal year," said Philip Shaw, chief economist at Investec. "But there is still a long way to go in establishing fiscal stability and a tight public spending round next year is needed."

Howard Archer of Global Insight felt that the new data would boost the Chancellor's chances of reigning in the deficit to £7 billion. Jonathan Loynes at Capital Economics said the data was good, but was made to look better by the fact that local authorities had contributed a surplus of £3.4 billion as compared to £0.5 billion in last April. “Borrowing remains undesirably high and we still believe that significant further tax hikes will ultimately be required in order to meet the fiscal rules convincingly and put the public finances back onto a sustainable footing,” he added.