STRONG income tax and corporation tax receipts enabled the Government to repay #3406m of debt last month, far more than the City had expected and well above the debt repayment of #348m in April of last year.
The Budget forecast for 1998-99 was for a Public Sector
Borrowing Requirement of #2300m, but already there is talk in the City of a debt repayment for the year as a whole.
In April income tax receipts were strong - up 18% year-on-year, mainly the result of large bonus payments in the month.
By contrast public spending was weak, rising less than 1% from a year ago. Net departmental outlays were reduced by #250m as a result of the transfer of ownership and management of Social Security buildings under the
Private Sector Resource.
Corporation tax receipts were 12% higher than in April 1997. This compares with the Treasury's forecast of a 2% decline in receipts for the full year.
VAT receipts increased in the wake of traders' changed settlement dates and a surge in tobacco duties to forestall Budget increases.
The Office for National
Statistics revised the 1997-98 PSBR from #900m to #1100m.
Adam Cole, UK economist at HSBC Securities, said: ''Once again the PSBR data were spectacularly good. It is impossible to explain away all the recent buoyancy of the public finances as erratic.
''We continue to believe that the underlying picture is better than implied by the official forecasts which point to a PSBR of #2000m this year.
''We look for a debt repayment of #3000m.''
Both the Conservatives and Liberal Democrats accused the Chancellor of the Exchequer,
Gordon Brown, of amassing a war chest to finance future spending.
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