THE Government's finances are much healthier than expected, showing a surplus of £153 million for the 11 months to the end of November.

The surplus is more than double the most optimistic forecasts for the period. And the strong growth in tax revenue shown in the figures looks set to continue into next year and leave the Government well placed to offer substantial tax cuts in the January Budget.

Analysts now believe the Minister for Finance, Mr Quinn, could have up to £350 million available for a tax cutting pre-election Budget.

An exceptionally strong surge in tax revenues over the 11 months has put the Government's finances firmly in the black, according to the latest official figures. Exchequer borrowing figures issued yesterday show an 11 per cent rise in total Government tax receipts to £11.6 billion compared with £10.4 billion in the same period last year.

Miscellaneous revenues to the Government also rose sharply, increasing from £275.6 million in 1995 to £378.7 million at the end of November last. Other receipts came in below the previous year but still added a further £330.8 million.

The figures also show increases in Government spending. Supply services spending rose by slightly more than 5 per cent to £9.6 billion in the 11 months from £9.1 billion last year, broadly in line with Government targets.

Central Fund spending also increased, rising from £2.6 billion to £2.7 billion.

The figures took most commentators by surprise, with the most optimistic forecasts pointing to a surplus of around £75 million at this stage of the year.

Economists said the better-than-expected result strongly confirms that the Government will substantially undershoot its Budget borrowing target of £729 million and could be as low as around £300 million, according to NCB economist, Mr Dermot O'Brien.

"It's a very good story. It confirms that tax revenue is still pretty buoyant and also provides a strong base going into 1997," he said. The current state of the Government's finances was also very positive in the context of European Economic and Monetary Union, clearly showing that it was sticking to its track record with the economy in very good shape, he added.

Riada economist Dr Dan McLaughlin said the EBR position was almost "unbelievable" given the difficult economic conditions in other European economies. But he stressed that it did seem to ensure that the Minister for Finance would have plenty of scope to offer substantial tax cuts in the Budget.

"There will be plenty of room for tax cuts of up to £350 million in the 1997 Budget. This would leave the Government running a Budget deficit of around 2 per cent of Gross National Product, which would still be prudent," Dr McLaughlin said.

Despite the surprising result, none of the analysts have altered their end of year forecasts, expecting the Government finances to perform broadly in line with market predictions.