The Office for National Statistics revealed that public sector net borrowing benefited from a surplus of GBP1.6 billion in October compared to a GBP0.4 billion surplus in the same month last year. However, the figure was below the forecast surplus of GBP2.0 billion for the month.

The ONS said that the balance has improved due to a substantial increase in tax receipts, particularly from corporations which increased by 15%, although it cautioned that the Exchequer traditionally records a high level of company tax receipts in October due to businesses making their quarterly tax payments.

The sale of British Nuclear Fuels Ltd's Westinghouse subsidiary for GBP2.1 billion and changes to the way North Sea oil companies pay tax also put a gloss on October's figures.

Total receipts in October stood at GBP43.1 billion, a year-on-year rise of 10.3%. Meanwhile, government spending increased by 8.9% to GBP36.2 billion.

The figures will be a boost to Brown, coming after a record deficit for the month of September. The Chancellor, who is due to deliver the pre-Budget statement in less than three weeks, thinks that the government will attain a budget deficit of GBP7 billion by year's end in March 2007, although this aim could depend on receipts collected in the self-assessment season in January. This haul is expected to be bolstered by big City bonuses.