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The UK swung to a record monthly budget surplus of £30.4bn in January, driven by higher tax receipts, in a boost for chancellor Rachel Reeves ahead of next month’s Spring Statement.
The surplus was double that recorded in January last year and the highest for any month since records began in 1993, the Office for National Statistics said on Friday.
January is important for the UK’s public finances because the deadline for receipts from self-assessed income taxpayers and those with capital gains tax bills falls at the end of the month.
Separate data on Friday showed that retail sales in the UK rose 1.8 per cent in January, the largest monthly increase since May 2024 and far ahead of the 0.2 per cent rise expected by economists.
Paul Dales, an economist at the consultancy Capital Economics, said that the improvement in the public finances and higher retail sales would “give the chancellor something positive to point to” in the Spring Statement on March 3.
The Labour government remains under pressure to kick-start the economy, following a year of lacklustre growth in 2025. Figures released this week showed that the unemployment rate hit a post-pandemic high of 5.2 per cent in December, with youth unemployment rising to 16.1 per cent.
Reeves is not expected to announce any major measures in the Spring Statement following two tax-raising Budgets since Labour returned to office in 2024.
Last November’s Budget included £26bn of tax rises and followed the £40bn announced in Reeves’ first Budget in 2024, raising the overall tax burden to a record high of 38 per cent of GDP by the end of parliament.
Explaining January’s surplus, ONS chief economist Grant Fitzner said that “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”.
According to provisional estimates from the ONS, self-assessed income and capital gains tax receipts were £46.4bn in January, £10.5bn higher than in the same period last year.
January’s surplus was also £6.3bn above a November forecast from the Office for Budget Responsibility, the UK’s fiscal watchdog.
In the first 10 months of the fiscal year that began in April, government borrowing was £112.1bn, according to the ONS, £14.6bn below the same period in the previous fiscal year. The figure was also below the OBR’s forecast of £120.4bn for the period.
The OBR will deliver its latest forecasts for economic growth and the public finances alongside the Spring Statement.
Unlike in previous years, the OBR will not deliver an assessment on whether the government is on track to meet its fiscal rules, but instead make a judgment at the next Budget.
