Britain recorded its largest month-to-month funds surplus on file in January as rising tax receipts and a pointy fall in debt curiosity prices boosted the general public funds.
Figures from the Workplace for Nationwide Statistics present authorities revenues exceeded spending by £30.4bn in January, the very best surplus since month-to-month data started in 1993 and nicely above Metropolis forecasts of £23.8bn.
January is usually a powerful month for receipts due to self-assessment tax funds, however this yr’s determine far surpassed the £14.5bn surplus recorded in January 2025.
The advance was pushed partly by a steep drop in debt curiosity funds, which fell to £1.5bn from £9.1bn in December. Decrease borrowing prices have eased strain on the Treasury’s stability sheet after final yr’s market volatility.
Whole authorities revenues rose practically 14 per cent year-on-year to £133.3bn. Earnings tax receipts elevated by £12bn, whereas nationwide insurance coverage contributions rose by £2.9bn following larger payroll levies launched final spring.
Grant Fitzner, chief economist on the ONS, mentioned January had delivered the strongest surplus since data started, with income features offsetting larger spending on public companies and advantages.
Throughout the primary ten months of the monetary yr, borrowing totalled £112.1bn — 11.5 per cent decrease than the identical interval a yr earlier and beneath the £120.4bn forecast by the Workplace for Price range Duty on the November funds.
The improved place strengthens the Treasury’s hand forward of the spring assertion on 3 March, though analysts warning that fiscal headroom stays fragile.
Dennis Tatarkov, senior economist at KPMG UK, mentioned weaker-than-expected progress in late 2025 might have eroded a part of the federal government’s £22bn fiscal buffer, although falling rates of interest have supplied some offset.
The chancellor, Rachel Reeves, is just not anticipated to announce contemporary tax rises or spending cuts on the spring assertion. Authorities U-turns on enterprise charges for pubs and inheritance tax modifications have narrowed a few of the out there headroom.
James Murray, chief secretary to the Treasury, mentioned the federal government was guaranteeing taxpayers’ cash was spent correctly and that borrowing this yr was on observe to be the bottom since earlier than the pandemic.
Whereas January’s surplus displays seasonal components, the mix of sturdy tax receipts and easing debt prices gives a short lived raise to the general public funds at a important level within the fiscal yr.
