UK posts smaller than expected January surplus as new finance minister readies budget

LONDON, Feb 21 (Reuters) – Britain posted a smaller-than-expected budget surplus in January, a reminder of the constraints facing new finance minister Rishi Sunak as he prepares to deliver his first budget next month.

The surplus excluding public sector-owned banks stood at 9.813 billion pounds last month, down 18% from January 2019, the Office for National Statistics (ONS) said.

A Reuters poll of economists had pointed to a surplus of 11.3 billion pounds.

January is typically a surplus month for Britain’s public coffers because of seasonal flows of income tax.

The latest data showed increases in income and sales tax receipts, but corporation tax income fell in January compared with a year ago.

The improvement in revenue was cancelled out by a hefty 5.7% annual increase in current spending — reflecting an increase on spending on health announced by former prime minister Theresa May.

Britain paid 2.1 billion pounds into the European Union budget in January, up by 1.1 billion pounds on a year ago.

The government accounts were boosted by a 843 million-pound fine to be paid by Airbus for a deferred prosecution agreement with various countries.

Sunak said on Tuesday he will stick with the March 11 date for the government’s first post-Brexit budget, dispelling speculation that the plans, likely to entail a big increase in spending, would be delayed.

His predecessor Sajid Javid, who was already working on plans to increase public investment after a decade of tight controls on spending, resigned unexpectedly last week.

The ONS said borrowing in the first 10 months of the financial year stood at 44.8 billion pounds, 14.9% higher than it was for April 2018 to January 2019.