What is the UK government budget surplus?

A budget surplus occurs when government income exceeds spending in a given period. The UK government budget surplus in January was £30.4bn, meaning tax receipts and other income were higher than monthly outlays. January often sees strong inflows from self-assessment, but this year’s figure topped forecasts.

Why did UK tax receipts January surge this year?

UK tax receipts January rose on stronger self-assessment and capital gains payments, plus firm National Insurance and income tax receipts. These factors, captured in ONS public sector finances, outpaced spending pressures. Compliance improvements and prior-year profits likely helped, though this pace may ease as growth remains weak.

How could the surplus affect the Rachel Reeves Spring Statement?

The surplus eases short-term fiscal pressure and may increase perceived headroom for the Rachel Reeves Spring Statement on 3 March. That could allow targeted steps without risking market confidence. Still, weak growth and cooling wages argue for caution, with an emphasis on credibility, public investment quality, and debt sustainability.

What does this mean for gilts and sterling?

A stronger UK government budget surplus can marginally reduce gilt issuance needs, which may support prices. Sterling can benefit from improved fiscal optics. However, global rate moves, Bank of England guidance, and UK growth data will likely dominate performance, so any support may be modest and could prove temporary.

Law and Government

UK Budget Surplus Record £30.4bn Sets Up Spring Statement — February 21

ByDanny Kontos February 21, 2026February 21, 2026

The UK government budget surplus reached a record £30.4bn in January, according to ONS public sector finances. Stronger self-assessment, capital gains, National Insurance, and income tax receipts drove the jump and beat expectations. The surprise eases near-term fiscal pressure ahead of the 3 March Spring Statement from Rachel Reeves. For investors in the UK, the data matters for gilts, sterling, and rate expectations. While the headline is strong, weak growth and cooling wages still limit room for big fiscal changes.