Borrowing surplus highest on record in January
By Michele Maatouk
Date: Friday 20 Feb 2026
(Sharecast News) - The UK government recorded its highest surplus in January since records began in 1993, according to figures released by the Office for National Statistics on Friday, while retail sales beat expectations, handing a welcome boost to Chancellor Rachel Reeves ahead of the Spring Budget.
The surplus came in at £30.4bn, above expectations of £24bn and double the figure from January 2025. It was also £6.3bn above the Office for Budget Responsibility's November 2025 forecast.
Borrowing in the financial year to January 2026 was £112.1bn, down 11.5% on the same period a year earlier, but still the fifth-highest April to January borrowing on record.
ONS chief economist Grant Fitzner said: "January - which is traditionally a strong month for self-assessed tax receipts - saw the highest surplus since monthly records began.
"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 ten months of the current financial year, borrowing is lower than the same period a year ago."
Separate data from the ONS showed that retail sales rose 1.8% on the month in January following a 0.4% increase in December and comfortably beating expectations for 0.2% growth.
On a yearly basis, sales were up 4.5%, ahead of expectations for a 2.8% jump.
Grant Fitzner said: "Retail sales rose slightly in the latest three months, as sales continued to pick up in the new year following a weak November.
"Motor fuel sales increased a little across the period, while sales of art works, tech retailers and furniture stores also performed well. These were partially offset by falls in supermarket sales."
Danni Hewson, head of financial analysis at AJ Bell, said: "January is usually the month that puts a smile on the faces of UK chancellors, but Rachel Reeves could be forgiven for getting cheek ache today.
"As taxpayers rushed to complete their self-assessment forms and pay any cash they owed to HMRC, recent policy changes and the sneaky impact of fiscal drag meant the amount coming into government coffers far outstripped the amount being spent.
"The two points in the year at which self-assessment payments are due often leads to a significant surplus, but once you add in other changes including increased employer's national insurance contributions, the government's current receipts were up a whopping 13.8% in January compared to the previous year.
"Borrowing over 10 months from April 2025 to January 2026 was also substantially lower than that over the corresponding 10-month period last year. However, it was still the fifth highest since records began, thanks primarily to increased spending on goods and services and inflation-linked benefit increases.
"This month's figures were also boosted by a £5 billion decrease in the interest being paid on the huge debt mountain. James Murray, chief secretary to the treasury, admits there is 'more to do' when it comes to reducing borrowing so less government cash is spent on interest payments and more of it can be spent on improving public services.
"Although January can only come once a year, the government will hope that with inflation continuing to cool the path forward is less difficult than the one behind."
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