Sharp fall in US budget deficit

Strong corporate profits have boosted US revenues

The US federal budget deficit for the first four months of the current spending year has fallen sharply.

The deficit for the budget year which began in October 2006 totalled $42.2bn (£21.7bn), down 57.2% on a year ago, the US Treasury Department reported.

The four-month figure was boosted by a £38.2bn budget surplus in January.

Revenues collected between October and January rose by almost 10% to a record $834.1bn, boosted by strong corporate profits and lower unemployment.

Government spending over the period also hit a record level, reaching $876.3bn.

The total federal deficit for the current budget year is expected to fall to about $200bn, compared to $247.7bn in the previous year, the US Congressional Budget Office has forecast.

However, President George W Bush's administration, in its 2008 budget submitted to Congress last week, forecast that the country's federal deficit for the current year would reach $244.2bn.