The UK’s public finances swung to a surplus in January, propelled by record income and capital gains tax receipts, but still fell short expectations as chancellor Rachel Reeves struggles to keep her Budget plans on track and kick-start the economy.
The public sector was in surplus by £15.4bn in January, £0.8bn more than last year and the highest seen in that month since 1993, the Office for National Statistics said on Friday.
However, this was still smaller than the £20bn January surplus the Office for Budget Responsibility had been expecting when it last published forecasts alongside the October Budget.
Borrowing for the financial year to January was higher than a year earlier, totalling £118.2bn — £11.8bn more than at the same point in the 2023-24 financial year, the ONS said, and higher than the £105.4bn the Office for Budget Responsibility was expecting in October.
“The UK fiscal position remains a worry,” said Dennis Tatarkov, senior Economist at KPMG UK, adding: “If the chancellor remains committed to her fiscal targets, then the Spring Statement may need to contain more tax and spending changes.”
A surplus often occurs at the start of the calendar year because self-assessed income and capital gains tax falls due at the end of January.
The ONS said receipts from these taxes of £36.2bn in January 2025, £3.8bn more than a year earlier and the highest for January since monthly records began in 1999.
This is a developing story
This article has been amended to reflect the fact that the January surplus in the public finances fell short of expectations
