(Limited) room for manoeuvre on borrowing?
Today's public finance figures for January are well above market expectations, and somewhat reassuring - at least when compared with last year's. January, you'll remember, is traditionally a "bumper" month for the tax man, with a surge in corporation tax receipts and all those self-assessment payments starting to come in.
Last year, January was a shocker: the government borrowed £1.3bn, the first January deficit since they started reporting monthly numbers. The consensus forecast for this year was for a tiny surplus - maybe £0.1bn. Instead the Treasury took in £3.7bn more than it spent, the largest surplus since before the collapse of Lehmans.
Borrowing in earlier months has also been revised down a little, leaving the deficit on course for a year-end total of around £140bn, nearly £10bn less than the OBR forecast of £149bn for 2010-11.
Two quick points to make about these numbers. The first is that the Treasury doesn't want you to get too excited about them. It is a peculiar feature of the current political debate that ministers are keen to talk down any sign that the public finances are stronger than we might have thought, but equally keen to talk down signs of weakness in the economy.
There may be only 2 full months left in this financial year, but there is still plenty that could go wrong. Officials point out that the comparison with last January is distorted by one-off changes in the timing of self-assessment payments, which will unwind next month (when revenues from that quarter are likely to be less than usual).
They also note that net borrowing by local authorities is playing a big role in the unexpectedly large fall in total government borrowing - and that is very prone to revision. (Though it could be revised down as well as up - indeed, it was partly lower than expected borrowing by local authorities that led the 2009-10 deficit came in significantly below Alistair Darling's budget-time forecast last year.)
Taking these and other one-off factors into account, the Treasury insists that the Chancellor is roughly on course to roughly meet his deficit target for this year, with less room for manouevre than the January figures suggest. But even with the caveats, I wonder whether they are erring on the side of caution. The IFS, along with most city forecasters, are still expecting an undershoot in the region of £5bn.
The more obvious, second, point is that the economy seems to be growing. As I noted when those fourth quarter GDP figures came out last month, it is very odd to have the economy shrinking by 0.5% at the same time as tax revenues are coming in exactly as forecast - if not a little faster. On Friday we find out whether the ONS has revised those numbers up a bit, as many independent forecasters suspect they will. However, we can surely say, on the basis of these figures, that the economy is unlikely to have continued shrinking in January.
Income and capital gains tax receipts were up 18% year on year, and corporation tax receipts were up 13% on the same basis. Some of the growth is coming from higher inflation (ie growth in nominal GDP, rather than real), and naturally the figures are somewhat backward-looking. But these are not numbers you would expect to see if the British economy was suffering a prolonged downward lurch.