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Last Updated: Thursday, 19 February, 2004, 12:18 GMT
No January blues for UK shoppers
Shopping mall
UK retail sales rose last month at their fastest annual pace in more than a year, making another Bank of England interest rate rise more likely.

In January, retail sales rose by 0.6%, a year-on-year increase of 6.4%.

The scale of the increase has surprised analysts, who expected a slow month after relatively strong sales over the Christmas holiday.

The Bank of England raised interest rates to 4% earlier this month, at least in part to help cool the economy.

City analysts now expect another rate rise in April or May.

VAT's better

Strong public spending has translated into healthy value-added tax receipts for the government, whose finances have benefited from the trend.

According to figures released separately by the Office for National Statistics, the government's net cash surplus was 14.4bn in January, compared with 11.9bn a year earlier.

VAT receipts were up 11.1% year on year, more than compensating for a fall in collection of corporation and income tax.

The cash figure is a boost for Chancellor Gordon Brown, who is due to present his budget on 17 March.

The BBC's John Moylan
"These numbers will have surprised the Bank of England's own economists"

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