UK Government Borrowing Falls in January

government borrowing fell in January after the UK recorded the largest public finance surplus for any January since 2008.

The Office for National Statistics said the January surplus, excluding banks, rose by £1bn to £11.2bn compared with last year. 

Surpluses are usually recorded in January because of the high level of tax receipts in the month.

Other figures showed retail sales growth rose much faster than expected.

Although the monthly borrowing figure was the highest for eight years, it was below the £12.6bn forecast by economists.

The Chancellor, George Osborne, tweeted: "With warnings of weaker economic outlook & challenges for future tax receipts this could bring, we can't be complacent & think job is done."

'Work to do'

Government borrowing for the current tax year year, from April 2015 to January, was £66.5bn - £10.6bn lower than at the same point in the previous 12 month period.

The Office for Budget Responsibility (OBR) has forecast that the government will borrow £73.5bn for the financial year to March.

"This still leaves the Chancellor with some work to do over the next few months if he still wants to meet this forecast," said Paul Hollingsworth of Capital Economics.

"After all, he is left with around £7bn left to borrow in February and March - last year he borrowed almost £15bn."

Samuel Tombs of Pantheon Macroeconomics said: "Barring revisions, [George Osborne] can borrow only £7bn in the last two months of the fiscal year if he wants to meet the Autumn Statement forecast - a feat not seen since 2003/04."

January's figures include housing associations for the first time because they were now considered to be under public sector control.

The change has increased borrowing for the financial year from April 2014 to March 2015 by £3.6bn.

Clearance

Separately, the ONS said retail sales volumes jumped 2.3% in January compared with December when they fell by 1.4%, leaving them 5.2% higher for the year.

The ONS said department stores posted the 34th month of consecutive year-on-year growth - the longest sustained period of growth for such retailers since the economic downturn in 2008.

Keith Richardson, managing director retail sector at Lloyds Bank Commercial Banking, said a cold snap last month prompted shoppers to look for winter coats, jumpers and footwear, while bargain-hunters were out in force in the post-Christmas sales.

"Online sales continued to soar, rising 10% year-on-year even as footfall rose, suggesting that those with sophisticated online and mobile operations are now attracting new customers from overseas," he said.