Extra money than ever has been left over within the public funds on account of extra tax being paid, official figures present.
January had the largest price range surplus since information started in 1993, based on information from the Workplace for Nationwide Statistics (ONS).
It meant the federal government acquired extra money than it spent final month, leaving £30.4bn left over.
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It is £15.9bn greater than the excess in January 2025, though the figures usually are not adjusted for inflation.
The excess is even increased than anticipated by impartial forecasters the Workplace for Price range Duty (OBR) – about £6.3bn larger.
Why?
Whereas there was little change in authorities spending, the highest-ever recorded surplus resulted from income being “strongly up” and decrease rates of interest, the ONS stated.
Self-assessed tax revenues had been almost £6bn greater than deliberate for and capital beneficial properties tax receipts surged.
Decrease rates of interest have meant borrowing cash price much less.
The price of borrowing was £1.5bn within the month, £5bn decrease than the time final 12 months.
A reduction for Reeves
It has been described as a “welcome reduction” and “excellent news” for Chancellor Rachel Reeves by analysts from Large 4 accounting agency PWC and financial analysis agency Pantheon Macroeconomics.
“This decline eases rapid stress on the general public funds”, PWC’s economist Nabil Taleb stated.
Paying extra on debt can imply public funds are extra uncovered to financial shocks.
However the path forward isn’t with out hazards for Ms Reeves.
The room she has to spend cash earlier than breaking her self-imposed fiscal guidelines – to deliver down authorities debt and stability the price range by 2030 – has narrowed for the reason that November price range.
Decrease gross home product readings, a key financial measure, might have already got eroded the sums Ms Reeves has to spend earlier than breaking her fiscal guidelines.
Anaemic economic growth and a rising unemployment rate may imply tax takes stall.
And the January tax income figures may very well be a one-off.
The month is essential for the exchequer due to the inflow of self-assessed earnings tax receipts.
Additional proof financial system ‘picked up well’
Excellent news for the financial system additionally got here within the type of retail gross sales, which recorded a much better than anticipated January.
The overall quantity of retail gross sales, which measures the amount purchased, elevated by 1.8% final month, the ONS stated.
It was the most important enhance since Might 2024.
There continued to be “robust” gross sales at on-line jewellers as they reported “demand had hit unprecedented ranges”, the ONS added.
Additionally promoting effectively had been artworks, furnishings and know-how,
This information gave “additional proof that financial development picked up well within the New 12 months as price range uncertainty fades”, Pantheon’s chief UK economist Rob Wooden stated.
Retail gross sales figures matter as they measure family consumption, the most important expenditure within the UK financial system.
