November 22, 2006 | posted by Michael Baxter in IABN |

While all around the cynics said Gordon wouldn’t do it, Mr Brown kept the faith, insisting that the UK would keep to his beloved golden rule. That’s the rule which says it’s okay to borrow on current account items, providing the books balance over the course of the economic cycle. A few changes in definition, defining for example expenditure of road maintenance as an investment, playing around with the timing of the economic cycle and he was pulling it off, but only just.

This time around, however, government fianances have been given a boost, not through some sleight of hand, not through smoke and mirrors but because of corporate profits.

October is the month for corporation tax receipts, and this year they were up, by a lot. In all, the current account enjoyed a £4 billion surplus in the month, compared to £2.3billion last year. It was the best October showing since 2001. So far this year, government borrowing for current account items is £8.7bliion, compared with £11.5 billion this time last year.

But while the government is doing well on current account, investment is up. Total borrowing for the year so far, including public investment is £23bn compared with £21bn this time last year.