By Peter Omopo
The UK government posted a record budget surplus of £30.4bn in January, as tax receipts outpaced public spending, according to new figures released by the (ONS).
The surplus — the gap between government income and expenditure — marks the highest monthly figure since records began in 1993, without adjusting for inflation. It significantly exceeded economists’ expectations of £23.8bn and was nearly double the £15.4bn surplus recorded in January last year.
January typically sees stronger public finances due to self-assessed income tax payments falling due during the month. However, the ONS said this year’s record figure was further boosted by a sharp rise in capital gains tax payments to .
The data comes ahead of the Spring Statement scheduled for 3 March, where Chancellor is expected to outline the government’s fiscal strategy.
Borrowing over the first 10 months of the financial year stood at £112.1bn, 11.5% lower than during the same period a year earlier. Despite the improvement, the ONS noted it remains the fifth-highest borrowing total for that period on record.
The Treasury said borrowing in 2026 is forecast to be “the lowest since before the pandemic.” Chief Secretary to the Treasury James Murray said the government aims to more than halve borrowing by 2030–31 to reduce the amount spent on debt interest and free up funds for public services such as policing, schools and the NHS.
Separate ONS data showed retail sales rose more strongly than expected in January. The volume of goods purchased increased by 1.8%, compared with 0.4% growth in December. Economists had forecast a 0.2% rise.
Sales were driven by strong demand for sports supplements, jewellery, artwork and antiques. Analysts said the data suggested the economy began the year on a firmer footing.
Paul Dales, chief economist at Capital Economics, said the figures would give Reeves “something positive to point to” in her upcoming statement. He added that the freeze on income tax thresholds generated an additional £3.6bn compared with last year, while a £17bn surge in capital gains tax receipts strengthened public finances.
However, Dales cautioned that borrowing over the full year had not fallen substantially and warned that some of the retail boost could prove temporary. He noted slowing wage growth and rising unemployment — now at its highest level in five years — as potential headwinds.
Shadow Chancellor criticised the government’s fiscal approach, arguing that high taxes and spending had weakened the economy and left inflation above target. He also warned that national debt and debt interest payments would continue to rise.
The ONS reported that the UK’s debt-to-GDP ratio stood at 92.9% at the end of January 2026, levels last seen in the early 1960s.
The latest figures set the stage for renewed debate over the government’s fiscal rules and borrowing strategy as the Spring Statement approaches.
