The largest January budget surplus on record smashed City expectations and was a real surprise given the recent downbeat economic news. But Philip Hammond will take the gift with open arms.

It is now five weeks until the scheduled date for Britain to leave the European Union and while most political and financial market analysts expect the current logjam to be broken, a no-deal outcome remains a possibility.

In those circumstances, the chancellor would be under pressure to support the economy through higher state spending and tax cuts. The size of the surplus recorded by the Office for National Statistics in its latest bulletin on the public finances means Hammond now has ample scope to do just that, should the need arise.

January is always a bumper month for the exchequer, because the end of the month is the deadline for the payment of self-assessed tax. Even so, the increase in the surplus from £9.3bn in January 2018 to £14.9bn was unexpected, especially against a backdrop of sluggish growth.

Clearly, there is a disparity between surveys showing the economy in danger of stalling in early 2019 and a huge budget surplus. It is possible – as Thomas Pugh of Capital Economics notes – that growth is not quite as weak as feared and that low unemployment and rising real wages are boosting consumer spending. Although it is always unwise to read too much into one month’s figures, the big jump in retail sales provides some supporting evidence for that thesis.

In any event, Hammond is now in a better position than he was when he made his budget speech in late October. Back then, the deficit for 2018-19 was forecast to be around £25bn: after the latest news it looks like being £3bn better than that.

It is not all good news for the chancellor because the OBR will almost certainly follow the Bank of England’s lead and revise down its forecasts for growth this year for the Treasury’s spring statement on March 13. Lower growth equals a bigger deficit.

So what does Hammond do on 13 March? Not a lot, is the answer. If there is a deal he will expect economic activity to rebound as pent-up investment takes place and for the OBR to revise up its forecasts by the time of the autumn budget. If it is a no-deal outcome he will be back with a mini-budget within weeks. Either way, he is going to keep his powder dry.