Does the chancellor have £30bn to spend?

Jeremy Hunt is trying to fend off pressure from MPs who want him to lower taxes. Credit: PA

Public sector borrowing in the 10 months to the end of January was £30.6bn less than the chancellor expected, based on OBR forecasts.

This will ratchet up pressure on him from Tory MPs to cut taxes in the March budget and from public sector unions to agree to more generous pay settlements.

Jeremy Hunt is trying to fend off the pressure.

He says "with debt at the highest level since the 1960s, it is vital we stick to our plan to reduce debt over the medium-term…It is crucial to reduce the amount spent on debt interest".

The UK government announced a surprise January budget surplus.

Central government debt interest was £6.7bn in January, the highest since records began in 1997. But with inflation and the debt stock so high, that should not be a surprise.

More intriguing was the record haul from self-assessment tax of £21.9bn, the highest January figure since monthly records began in April 1999 and £5.5bn or one-third higher than in January 2022.

This reflects income earned in the year to April 2022 and reflects the strong post-Covid economic bounce, which has depressingly fizzled out.

We are now in a grim period of economic stagnation. That is why the chancellor faces pressure from all sides for a greater immediate stimulus, but he is desperate to resist it, with the national debt at levels not seen since the early 1960s and inflation at levels not seen since the 1980s.

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