Figures released by the Office for National Statistics on Friday showed that chancellor Gordon Brown continues to have record amounts of cash available in the run-up to the next general election.

The figures show that despite a £9.5 billion cash deficit recorded for December, largely caused by interest payments on government debt, the Treasury has a cumulative surplus of £23.5 billion over the fiscal year 2000-01. The government is widely predicted to exceed its estimate of a £10 billion surplus for the year by around £5 billion.

The good news for the chancellor means he is likely to have room for tax cuts in his next budget, although worries over the slowing US economy may cast doubt over the long-term future of the buoyant government surpluses.

The city, however, will be watching carefully to ensure that any pre-election fiscal relaxation is affordable should the economy slow in the months following a general election.