• Public sector borrowing in January 2012 was -£7.8bn compared with -£5.2bn in January 2011

Commenting on the public sector finance figures for January 2012 published today by the ONS, David Kern, Chief Economist at the British Chambers of Commerce (BCC), said: “January is usually a month when the public finances are in surplus because of large corporate tax payments. This year the surplus was bigger than in 2011, better than most analysts predicted. Longer-term comparisons also show a welcome improvement in the UK’s fiscal position. In the first ten months of the current financial year, the total public borrowing was £15.7bn lower than in the same period of last year. Even if we assume some worsening in the final two months of the year, it is likely that the deficit will be lower than the OBR predicted at the time of the Autumn Statement.

“Given the challenges facing the economy, both domestically and internationally, we believe the fiscal strategy is on course and the government should persevere with cutting the structural deficit. But priorities within the spending envelope should be reallocated towards policies to support growth.

“If borrowing is lower than predicted by the OBR as expected, it will increase the UK’s credibility in the financial markets. This gives the Chancellor some room for flexibility in his upcoming Budget to implement measures to support growth, and help companies create jobs, invest and export. This should include an effective credit easing programme and an aggressive reduction in red tape.”

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