The UK posted its largest monthly budget surplus ever in January 2026, with a -£30.4 billion deficit, per Office for National Statistics data. This marked the highest surplus since records began in 1993, surpassing last January’s £15.4 billion and exceeding expectations of £23.8 billion.

Higher capital gains tax payments drove the surplus, as the government typically sees increased revenue in January from self-assessed taxes. HM Treasury now forecasts 2026 borrowing to be the lowest since pre-pandemic levels. The surplus arrives ahead of Chancellor Rachel Reeves’ Spring Statement on March 3, offering a timely boost.

January retail sales rose 1.8%, signaling stronger consumer activity. Analysts at Capital Economics noted the economy’s healthier start, though they warned borrowing risks persist if fiscal policies shift. The data underscores a pivotal moment for the UK’s economic trajectory.