UK Posts Record £15.4bn January Budget Surplus but Faces Rising Borrowing Costs

Chancellor Rachel Reeves faces calls for tax hikes or spending cuts as borrowing surpasses forecasts and fiscal rules come under pressure.

The UK government recorded a £15.4 billion budget surplus in January, the largest since records began in 1993, driven by self-assessed tax returns.
Despite the surplus, public sector borrowing for the financial year has reached £118.2 billion, exceeding the Office for Budget Responsibility's forecast of £105.4 billion.
Economists warn that rising borrowing costs and inflation have eroded the Chancellor's fiscal headroom, raising the likelihood of tax increases or spending reductions in the upcoming fiscal update on March 26.
The debt-to-GDP ratio has climbed to 95.3%, levels not seen since the 1960s, underscoring long-term fiscal challenges.
Government officials reaffirm their commitment to fiscal rules, emphasizing a line-by-line review of public spending to ensure economic stability.