“While a surplus in public finances is typical for January, the record £30.4bn was far larger than expected by the OBR. Combined with relatively favourable overall borrowing figures since April 2025, the government remains on track to borrow an additional £130bn in the 2025/26 fiscal year.
“However, as we approach the Spring Statement, the Chancellor’s headroom has already likely diminished by £3bn in the three months that have passed since the Budget. Weaker than expected growth in the second half of 2025 has shaved off an estimated £6bn from the nearly £22bn of buffer, partially compensated by lower interest rates.
“Looking ahead to the Autumn Budget, weaker growth could once again unsettle the fiscal outlook, creating more speculation of potential tax rises. This time, the key driver is lower projected migration, which is expected to reduce future revenues and risks pushing public finances into deficit in 2029/30. This underscores how small changes in long-term forecasts can significantly impact fiscal policy.”
-ENDS-
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