George Osborne can breathe a sigh of relief, as January 2012 saw the highest tax receipts in the last four years. The excellent news was presented to the Chancellor just one week after the UK almost lost its AAA rating. The reduction in rating was threatened by Moody’s ratings agency, who said that the odds of a downgrade were one in three. The ratings agency blamed the UK’s high level of debt, the effect of the Eurozone crisis and low prospects for growth.
As borrowing of the local government reduced and tax receipts increased, the figures for January 2012 revealed an excess of nearly £8 billion, higher than the figures for January 2011 which stood at £5.2 billion. Tax receipts reached their highest level since the year when records for the Office for National Statistics started in 1998, at £60.9 billion.
Tax receipts are always higher in January than other months, as self-assessment taxpayers reach the deadline for filing and paying outstanding tax bills. Corporation Tax customers also help to fill the Treasury coffers at this time of the year. The level of borrowing is down by £15.7 billion on the figure for 2011 at £93.5 billion. Chris Williamson, the Markit financial information company’s chief economist, said:
“That undershoot may provide George Osborne with some leeway to seek ways to stimulate economic growth in the Budget.”
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