In a striking turn for the UK economy, official figures released today by the Office for National Statistics (ONS) reveal that the government recorded a budget surplus of £30.4 billion in January 2026. This figure marks the largest monthly surplus since records began in 1993 and is more than double the surplus achieved in the same month last year. The result significantly outperformed market expectations, coming in £6.3 billion higher than the projections set by the Office for Budget Responsibility (OBR) in November.
The surge in government revenue was primarily driven by a robust performance in self-assessment tax receipts, which are traditionally strong in January. Central government tax receipts rose to £109.7 billion, an increase of £13.3 billion compared to January 2025. Notably, capital gains tax receipts contributed £17 billion to the total, a rise of £7 billion year-on-year, linked in part to asset disposals following policy changes announced in the autumn budget. Additionally, lower debt interest payments provided a further cushion, helping to offset the ongoing costs associated with public services and welfare.
Chancellor Rachel Reeves has welcomed the data as a positive development ahead of her forthcoming Spring Statement, scheduled for March 3. With cumulative borrowing for the first ten months of the 2025-26 financial year now standing at £112.1 billion—well below the OBR’s initial forecast—the Treasury appears to be on a firmer fiscal footing than anticipated. While the broader economic context remains challenging, with national debt still at approximately 92.9% of GDP, this windfall offers a momentary sigh of relief for the government’s fiscal planning.
Despite this "bumper" surplus, economists caution that the structural challenges facing the UK economy remain intact. Analysts from the Resolution Foundation and the Institute for Fiscal Studies (IFS) have noted that while the January figures are encouraging, they do not necessarily indicate a fundamental shift in the government's long-term fiscal trajectory. Moving forward, the focus is expected to remain on balancing the need for sustainable deficit reduction with the demand for growth-oriented investments, as the Chancellor prepares to outline her updated strategy in the coming weeks.