Britain’s February budget deficit smallest since 2008

Britain had its smallest budget deficit for any February since 2008, as the late arrival of self-assessed tax filings boosted government revenue.

Net borrowing excluding public-sector banks was £6.9bn (€9.5bn) compared with £10.4bn a year earlier, the Office for National Statistics said yesterday. Revenue surged 7.2% and government spending fell 0.7%.

With the May general election on a knife edge, Chancellor of the Exchequer George Osborne is seeking to persuade voters that only his Tory Party can be trusted with recovery and erasing a budget deficit that still amounts to 5% of gross domestic product. In his budget on Wednesday, he held out the prospect of an end to austerity within four years. Labour says the Tories are planning “extreme” spending cuts that would damage public services.

Osborne received a boost last month as the Treasury received final tax payments for 2013-14, which benefited from individuals shifting income to take advantage of a cut in the top tax rate. The January 31 deadline for filing tax returns fell on a Saturday this year, meaning many people paid in February.

In the first 11 months of the fiscal year, the budget deficit fell to £81.8bn as income-tax receipts jumped 4.9% to a record £153.9bn.

That raises the possibility that Osborne could undershoot the forecast for 2014-15 announced by the Office for Budget Responsibility just two days ago. A shortfall of no more than £8.4bn in March is needed to meet the new projection.