Public borrowing is still on course to exceed Gordon Brown’s Budget forecasts despite the improved outlook for public finances after encouraging tax revenues for October.

A strong month for corporation tax payments and very low public expenditure allowed the government to run a £2.2bn surplus in October compared with a £1.7bn deficit a year earlier. Excluding net capital investment, revenues exceeded expenditure by £4.1bn, against a £400m shortfall in October 2004.