Brown hails new finance figures

The figures are good news for Mr Brown

Gordon Brown has trumpeted the latest UK public finance figures as evidence that his fiscal rules are being met.

The UK's public finances posted their biggest cash surplus in five years in January, data published by the Office for National Statistics has shown.

Under the two main measurement rules, there were surpluses of £16.86bn and £6.59bn respectably.

Mr Brown's 'golden rule' of fiscal policy is that he will only borrow to invest, and not for general spending.

The latest figures could be the last before Chancellor Gordon Brown's final pre-election budget, expected in March.

Increased tax returns

"Today's figures show that Britain, as I promised, is meeting our fiscal rules," said Mr Brown.

Trends are going his (Brown's) way Ross Walker, economist at RBS Financial Markets

"We will remain steadfast in our fiscal discipline which will not waver nor be relaxed."

January's net cash surplus measurement was £16.86bn, more than £2bn better than a year earlier, while the government's preferred net current surplus measurement of £6.59bn was about £3bn higher than 12 months previously.

Both sets of surpluses show that the government is now receiving some of the taxation revenues it badly needs to meet its public spending commitments.

The government's corporation tax receipts were up 30.6% on January last year.

'Danger remains'

"Trends are going his (Brown's) way," said Ross Walker, UK economist at RBS Financial Markets.

"Spending growth has been slowing and revenues have been picking up."

But economists said there was still a danger of Brown breaching his "golden rule" - that the government will only borrow to invest over the economic cycle - next year and that taxes may still have to go up.

"It is very much touch and go whether the rule will be met in this cycle," said Jonathan Loynes, chief UK economist at Capital Economics.

"We continue to expect sizeable tax hikes after the election."

In a separate report on pensions, actuary Watson Wyatt warned that the cost of meeting the pension requirements of UK public sector workers had risen so quickly that it now dwarfs the level of public sector debt.

Watson Wyatt predicts that the government will continue with efforts to lower the public sector pensions burden, despite Friday's day of protests against proposals to raise the retirement age for public sector workers.