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Thursday, 18 November, 1999, 12:49 GMT
Brown's bulging war-chest
Chancellor Gordon Brown appears to have been overly-cautious

The so-called "war chest" of spare cash being built up by UK Chancellor Gordon Brown grew faster than expected in October.

Official figures show that the UK Government's budget surplus for the month was more than 1bn larger than predicted by analysts.

The public sector net cash requirement (the former PSBR) was 9bn ($14.8bn) in October, the Office for National Statistics (ONS) reported.

Analysts had expected the surplus - the amount coming into the public purse from taxes minus the amount being spent - to be 7.8bn pounds.

The ONS said the figures had been boosted up by a bumper 11.3bn inflow of corporation tax, the highest level ever in a single month.

Companies with accounting years ending in December last year had to pay their tax in October.

Spending opportunities

The cumulative public sector net borrowing for the tax year to date (April-October) was 4.1bn in surplus, the ONS said.

That compares with the chancellor's forecast in last week's pre-Budget report that the figure for the whole year would be a surplus of 3.5bn, an estimate economists say is very cautious.

The ONS also said public debt as a percentage of gross domestic product had fallen to 39%, the lowest since July 1994.

The monthly figure compares with a revised September deficit of 1.9bn.

The ONS figures confirm the view that as the economy picked up Chancellor Gordon Brown would see billions of extra pounds flow into the Treasury.

15.5bn boost

The suggestion has been that this money may be used for a pre-election spending spree, or tax cuts.

Mr Brown has said that he would not splash out, but these latest figures suggest that he would certainly have the resources to do so if he wished to.

His spending and tax plans were decided against predictions of successive deficits of 4bn and 5bn.

These have now been revised into surpluses - with a cumulative net gain of 15.5bn to the public purse.

The latest figures suggest that even that gain may be on the conservative side.

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09 Nov 99 |  The Economy
Economic growth swells war chest

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