A record government borrowing surplus last month has given the Chancellor a welcome boost ahead of the spring statement.
The Office for National Statistics (ONS) said the surplus – when the government receives more than it spends – came in at £30.4 billion in January, the highest for any month since records began in 1993.
It rose on the back of self-assessed tax payments and a fall in debt interest to the lowest level since March 2020.
The surplus was also £6.3bn bigger than predicted by the Office for Budget Responsibility (OBR) and £15.9bn higher than the same month a year ago.
ONS chief economist Grant Fitzner said: “January – which is traditionally a strong month for self-assessed tax receipts – saw the highest surplus since monthly records began.
“Revenue was strongly up on the same time last year, while spending was little changed, due to lower debt interest payments largely offsetting higher costs on public services and benefits.
“Across the first 10 months of the current financial year, borrowing is lower than the same period a year ago.”
Chief Secretary to the Treasury, James Murray said: “We have the right plan to build a stronger, more secure economy. We have doubled our headroom, we are bringing inflation down, we are making sure that taxpayers’ money is spent wisely, and borrowing this year is forecast to be the lowest since before the pandemic.
“We know there is more to do to stop one in every £10 the government spends going on debt interest, and we will more than halve borrowing by 2030-31 so that money can be spent on policing, schools and the NHS.”
The Institute for Fiscal Studies noted that the government normally runs a surplus in January, though today’s figure is more than double the figure for the same month last year, and a £6 billion improvement on OBR’s forecast from November.
Emeritus Professor Joe Nellis, economic adviser at MHA, said: The Government’s revenue was £30.4bn higher than its expenditure in January, a remarkable result for the Chancellor ahead of the Spring Statement in March.
“UK bond yields have also fallen in recent months, reflecting greater stability in the economy. This relative stability offers the government some short-term reassurance.
“However, this improving picture is not without risk. Recent political uncertainty has the potential to disrupt these projections, particularly if it delays policy decisions, weakens business confidence, or leads to changes in fiscal priorities.
“Uncertainty around future tax policy, spending commitments or the timing of key economic decisions could affect investment, slow growth and, in turn, put renewed pressure on government revenues.”
Government borrowing this year is forecast to be the lowest in 6 years as a share of GDP, and the UK is reducing borrowing more than any other G7 country between 2025 and 2030. It is forecast to more than half from 4.5% in 2025-26 to 1.9% in 2030-31.
Net financial debt (PSNFL) is forecast to be lower as a share of GDP by the end of the forecast (2030-31) than today (2025-26).
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