GOVERNMENT SURPLUS

The UK government saw a surprise surplus in its finances in January despite ‘substantial spending’ to help with energy bills and EU payments. The highest self-assessed income tax receipts since records began in 1999 boosted the UK’s coffers. It meant it spent less than it received in tax, leaving a £5.4bn surplus.

Economists said the figures showed a “mixed picture” with public finances still weaker than this time last year ahead of next month’s Budget. Chancellor Jeremy Hunt will set out his plans for tax and spending on March 15th.

Martin Beck, chief economic advisor to the EY ITEM Club which is a UK economic forecasting group, said the figures gave Mr Hunt ‘some positives to work on’ in his Budget.

Mr Beck said the fall in cost of wholesale energy meant the government’s spending on support for bills ‘will be a fraction’ of what was officially forecast last year. However, because the government’s self-imposed fiscal rules around debt relate to five years in the future, he said short-term movements in UK’s finances don’t have much bearing on policies.

A survey jointly conducted by two leading UK debt collection agencies has revealed the true extent of the effects of late payment on the nation’s local small business owners. There has been a spike in late payments to small businesses across the UK as the economy continues to remain unstable in the post pandemic era.

The survey, collaboratively undertaken by leading debt collection agencies Federal Management and Frontline Collections, has revealed that 79% of the small business owners surveyed said their mental health suffered as a result of business late payments. The majority of smallest businesses (those with fewer than five employees) said they are constantly worrying about not being paid at all.

Small local business owners are being exposed to stress, financial worries, insomnia, depression and have even seen personal relationships affected by the problems late payment is causing them. 41% of SME owners said that late payment had caused them issues outside of work.

More worryingly, the survey showed that a shocking 48% of small business owners are not sure whether their businesses will still be trading this time next year.

The survey also found that 66% of SME owners have already had to supplement their Small Businesses cash flow with the use of personal funds. This includes many that have had to re-mortgage their homes and cash in pension policies.

Public borrowing in the financial year to date is £30.6bn less than predicted by the Office for Budget Responsibility (OBR), the government’s official forecaster.