Osborne discovers surplus down the back of the government sofa

Government borrowing is down and tax take is up. Great news for the Chancellor, who has saved a tidy £7.75bn chunk of change.

by Rebecca Burn-Callander
Last Updated: 19 Aug 2013
The Office for National Statistics has just reported the highest government surplus for four years. As of last month, there is more than £7bn in the coffers, mostly down to an influx of tax payments as the self-assessment deadline struck on January 31.

The government has been increasingly lean and mean with its wallet, borrowing £93.5bn so far in this financial year, down from £109bn in 2010-11. The surplus takes our net debt even further away from the terrifying £1tn figure we saw in 2011, down to £989bn, that’s 63% of GDP.

The figures could steady the strained nerves of Moody’s analysts, who put the UK’s rating on a ‘negative outlook’ last week. Ross Walker, economist at RBS, agrees that the odds on a triple-A downgrade are widening: ‘It's a good set of data,’ he says. ‘We are still borrowing huge sums, but against a backdrop where we had Moody's negative outlook, these numbers help.’

Over at Santander, pockets are looking decidedly emptier. The bank has been fined £1.5m for selling ‘misleading’ investment packages to its customers. City watchdog, the FSA, slapped Santander with the penalty after it sold £2.7bn worth of structured investment products without making it clear if punters were covered by the Financial Services Compensation Scheme. No one’s lost any money, the FSA is keen to stress, but eagle eyes are trained on the banks’ comings and goings. We are duly reassured, regulators.

The FSA has also been having 'a good year', incidentally. It made £91.2bn in fines to March 31 in 2011, a record amount, more than three times the previous year's haul. Unlike government, however, the money gets redistributed among its members as a discount on their fees. Perhaps Osborne's will suggest something similar in his Budget next month? Then again, perhaps not...

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