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Expected Fall In January Tax Revenue Will Give Chancellor A Pre-Budget Headache

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The first indications that George Osborne's deficit reduction timetable is slipping could come this week with the release of the official public borrowing figures for January.

Some economic analysts forecast that the public sector net borrowing statistics for last month, due on Tuesday, will show a fall in tax revenues on similar levels to a year ago. Philip Shaw of Investec said: "We think it's likely the figures will be less good than in January last year."

January is normally a bumper month for tax revenue, as thefigures are boosted by self-assessment income tax returns, plus capital gains and corporation tax payments. In January 2011, the ONS registered a surplus of £5.1bn.

Tax revenues in the month were £59bn, £10bn higher than the next best month of the fiscal year. Investec are forecasting a fiscal surplus for the Government this January of £4.7bn – a worsening of around £500m on the position of a year earlier.

If only consumers would borrow more money to boost the economy the govt could have higher tax revenues which would enable it to borrow more money and boost the economy.

I think thats how it works to boost the economy and get Britain growing again...

It will be interesting to see how close to this forecast the actual figures are...

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