UK Government Finances In Surplus, But Pressure Builds On Reeves

Pressure is mounting on UK Chancellor Rachel Reeves’ tax and spending plans after a government budget surplus for January fell short of official forecasts, Michael Race and Harry Farley reported for BBC News.

The Office for Budget Responsibility (OBR) will release its latest economic outlook and provide details on how much financial leeway the chancellor has within these fiscal constraints on March 26. I Photo: Lauren Hurley, DESNZ HM Treasury Flickr

The £15.4 billion surplus—the gap between government tax revenue and spending—was the highest recorded for January since records began more than three decades ago.

However, it was well below the £20.5 billion projected by the UK’s official forecaster, sparking speculation that Reeves may have to either cut public spending further or raise taxes next month to meet her fiscal targets.

On Friday, the government reaffirmed that its fiscal rules are "non-negotiable."

Reeves has set two primary rules aimed at stabilizing the UK economy:

1. Day-to-day government expenses must be covered by tax revenue, rather than borrowing.

2. Debt must decline as a share of national income by the end of the current parliamentary term (2029–2030).

   
   

On March 26, the Office for Budget Responsibility (OBR) will release its latest economic outlook and provide details on how much financial leeway the chancellor has within these fiscal constraints.