The chancellor is facing calls to cut taxes and raise public sector pay after the government recorded a surprisingly large £5.4bn surplus last month.
The balance sheet is typically in surplus in January because of tax receipts from self-employed workers, but this year the figure was £5bn higher than predicted by the Office for Budget Responsibility. Public borrowing for the year was also £30bn below the OBR’s November forecast.
Capital gains tax payments hit £13.2bn in January – up 24% from the same month in 2022 – as investors hurried to lock in gains ahead of speculation about tax rate rises last spring.
The preliminary “flash” reading of the S&P Global/CIPS UK composite purchasing managers’ Index jumped to 53 in February from 48.5 in January, above the 50 threshold that separates growth from contraction for the first time since July.
Insiders say this is unlikely to prompt tax cuts in next month’s Budget.
