Britain’s new Chancellor Rishi Sunak is facing less financial wriggle room ahead of his first budget after the UK recorded a smaller-than-expected surplus.
In January, the UK spent less money than it received in taxes and other income, providing a breathing space in the accounts of £9.8bn.
However, this is down 18% – some £2.1bn – from the same month last year, the Office for National Statistics (ONS) said.
A Reuters poll of economists had pointed to a surplus of £11.3bn.
The UK regularly posts a surplus in January, because of the receipt of self-assessed tax returns.
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 the hike in health spending announced by the former prime minister Theresa May.
The latest finance figures also show Britain paid £2.1bn into the EU budget in January, up by £1.1bn on a year ago.
This rise is largely because of the timing of contributions made by member states during 2020 rather than a reflection of any budgetary increase.
While the UK officially quit the bloc on 31 January, it continues to align with EU rules and pay into Brussels’ coffers during the transition period, which lasts until the end of December.
The public purse was also bolstered by a £843m fine to be paid by Airbus for a deferred prosecution agreement with various countries.
Mr Sunak has confirmed he will stick with the 11 March date for the government’s first post-Brexit budget, following speculation the tax and spending plans could 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 £44.8bn, 14.9% higher than it was for April 2018 to January 2019.