‍In our Market Monday insights, Prosperity Investment Management examines the latest developments across the globe's biggest financial markets - providing you with all the latest information you need to know.

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UK in surprise boost after record tax payments in January

The UK government saw a surprise surplus in its finances in the month of January despite substantial spending introduced to help with energy bills and EU payments.

The highest self-assessed income tax receipts since records began in 1999 boosted the UK's coffers. It meant it spent less than it received in tax, leaving a £5.4 billion surplus.

Economists said the figures showed a "mixed picture" with public finances still weaker than this time last year ahead of next month's Budget as Chancellor Jeremy Hunt looks to set out his plans for tax and spending in the upcoming weeks.

Public borrowing in the financial year to date is £30.6 billion less than predicted by the Office for Budget Responsibility (OBR), the government's official forecaster.

Annually in January, the government tends to take more in tax than it spends in other months due to the amount it receives in self-assessed taxes, according to the Office for National Statistics (ONS).

But most economists had predicted borrowing to rise this time, in part due to the large amount the government is spending on supporting households with their energy bills.

In addition, the ONS stated the government had faced "large one-off payments" in January relating to historic customs duties owed to the EU in the wake of Brexit.

However, these costs were largely offset by record self-assessed income tax payments of £21.9 billion in January, which has left the government with a surplus.

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German economy shrinks more than expected by 0.4% in fourth quarter of 2022

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The German economy shrank by 0.4% in last year's fourth quarter with the latest reports from the National Statistics Office.

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The German economy shrank by 0.4 per cent in last year's fourth quarter, the national statistics office said Friday, a sharp downward revision from its initial report that gross domestic product declined by 0.2 per cent.

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The quarter-on-quarter contraction in the October-December period was the first since the first quarter of 2021.

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Consumer spending, which propped up growth in the first nine months of last year, dropped by 1 per cent in the final three months of 2022.

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Investment in construction and machinery showed bigger drops in the final quarter, the Federal Statistical Office said.

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The full-year 2022 growth figure for Germany, Europe's biggest economy, remained at the 1.8 per cent that the office reported at the end of January.

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The economy has generally held up well, despite pressure from high inflation and fears last year of an energy crunch as Russia reduced and then cut off its gas supplies to Germany.

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Cash-strapped Pakistan receives funds worth $700 million from China Development Bank

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Pakistan Finance Minister Ishaq Dar has confirmed that the State Bank of Pakistan (SBP) has received USD 700 million from the China Development Bank (CDB).

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This comes as a much-needed boost to the country's forex reserves as the country suffers from an economic crisis.

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Earlier this month, the country's foreign exchange reserves slipped to the alarming level of below USD 3 billion for the first time in nine years, reducing import capacity to slightly over two weeks, according to The Express Tribune.

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Pakistan has sought to secure assurances from Saudi Arabia and China for more loans, as the government seeks to revive the International Monetary Fund (IMF) programme.

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The current situation in Pakistan is the most difficult faced by the country in the last two decades.

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In December 2022, inflation in the country stood at 24.5 per cent, almost double of 12.3 percent from the previous year.

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