The UK public sector posted its biggest budget surplus in four years in January. Revenues (excluding interventions) exceeded spending by L7.8 billion, compared to a surplus of L5.2 billion a year earlier. The consensus was looking for lower surplus of L6.3 billion. The surplus including government support for the banks was L10.7 billion. The ONS figures showed total government receipts rose 2.8% Y/Y to a record high of L60.9 billion. January is usually the biggest tax collection month of the year. (41,8 EUR, -0,44%) government expenditure rose at roughly the same pace. The improvement in the finances was driven almost entirely by lower borrowing by local authorities, reflecting spending cuts in services such as refuse collection. Only two months are left in the UK financial year, which runs through March, indicating that the UK government is well on track to meet the borrowing target of L127 billion. Nevertheless, the OBR warned that tax receipts in the remaining two months is likely to be weak due to smaller bonuses in the financial sector and cited the risk that the central government spending could accelerate. On March 12, UK Chancellor of the Exchequer Osborne will reveal his new budget for the year 2012-2013.