UK records largest ever budget surplus in boost for Reeves ahead of spring forecast

The UK government recorded its largest ever budget surplus in January, in a boost for chancellor Rachel Reeves ahead of the spring forecast.

The public sector recorded a surplus of £30.4bn in January, according to figures published by the Office for National Statistics (ONS) on Friday.

This was £15.9bn, or double the surplus recorded in January 2025, and £6.3bn higher the Office for Budget Responsibility’s (OBR) November forecast. This was also the highest surplus in any month since records began in 1993 and ahead of consensus estimates of £23.8bn.

The government usually records a surplus in January because tax receipts are higher than in other months due to receipts from self-assessed taxes. The ONS said that combined self-assessed income and capital gains tax receipts were provisionally estimated at £46.4bn in January 2026, which was £10.5bn more than January last year.

Government borrowing for the financial year to January came in at £112.1bn, which was £14.6bn, or 11.5%, less than in the same 10-month period a year ago. However, the ONS highlighted that this was still the fifth-highest April to January on record.

Grant Fitzner, chief economist at the ONS, said: “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.

“Across the first 10 months of the current financial year, borrowing is lower than the same period a year ago.”

James Murray, chief secretary to the Treasury, said: “We have the right plan to build a stronger, more secure economy. We have doubled our headroom, we are bringing inflation down, we are making sure that taxpayers’ money is spent wisely, and borrowing this year is forecast to be the lowest since before the pandemic.

“We know there is more to do to stop one in every £10 the government spends going on debt interest, and we will more than halve borrowing by 2030-31 so that money can be spent on policing, schools and the NHS,” he added.

The figures come just over a week ahead of the spring forecast, scheduled for Tuesday 3 March. On that date, the OBR is set to publish its latest economic and fiscal forecast, with Reeves due to give a statement in parliament in response to the assessment.

Read more: UK inflation falls to lowest since March 2025

The government has committed to shifting to having one major fiscal event a year at the budget in the autumn, in an effort to provide the public with more stability and certainty over policies.

Reeves delivered the autumn budget on 26 November, which was later than usual. Speculation over potential tax rises swirled in the meantime, with concerns that this uncertainty weighed on the economy.

Professor Joe Nellis, economic adviser at accountancy and advisory firm MHA, said that January’s surplus was a “remarkable result” for the chancellor ahead of the spring forecast.

“Overall, borrowing remains close to official expectations for 2025–26, helping to ease immediate concerns about a renewed fiscal deterioration,” he said.

“UK bond yields have also fallen in recent months, reflecting greater stability in the economy,” he said. “With inflation pressures easing and growth showing tentative signs of improvement, the public finance outlook appears more predictable than it was a year ago.”

At the same time, Nellis said this “improving picture is not without risk”.

“Recent political uncertainty has the potential to disrupt these projections, particularly if it delays policy decisions, weakens business confidence, or leads to changes in fiscal priorities,” he said. “Uncertainty around future tax policy, spending commitments or the timing of key economic decisions could affect investment, slow growth and, in turn, put renewed pressure on government revenues.”

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