Britain built up a record budget surplus in January thanks to a usual surge in tax receipts, though heightened expectations left the figure underwhelming.
According to Office for National Statistics estimates, the public sector was in surplus by £15.4 billion last month, marking the highest for January since records began in 1993.
This represented a £0.8 billion increase year-over-year, as a usual increase in receipts over the month on its self-assessed tax deadline exceeded spending.
However, the figure was £5.1 billion off the Office for Budget Responsibility’s forecast, leaving questions around Chancellor Rachel Reeves’ ability to keep within fiscal rules.
“January’s disappointing public finances figures [...] continue the run of bad news for the chancellor in 2025 and underline the difficult choices she faces,” Capital Economics’ Alex Kerr said.
“While there is increasing pressure on the government to commit to higher defence spending, the OBR is likely to conclude that the chancellor’s headroom against her fiscal rules has been wiped out and she will probably need to tighten fiscal policy as a result.”