UK Government Achieves Budget Surplus of £5.4 Billion in January

The UK government managed to achieve a budget surplus of £5.4 billion in January, thanks to a surge in self-assessed taxes.^[0] According to the Office for National Statistics (ONS), self-assessed income tax receipts for the month totalled £21.9 billion, the highest figure since records began in April 1999 and a third higher than the same month a year ago.^[1]

However, this was partially offset by a large one-off payment due to historic customs duties owed to the EU and “substantial” spending on energy support schemes.^[2] Payments to energy suppliers hit roughly £8 billion as a result of the Government's price cap schemes.^[3]

Interest payments on government debt hit a record high of £6.7 billion in January, the highest amount since records began in 1997.^[4] This pushed the total borrowing for the 2022/23 financial year to nearly £117 billion, well below the £147.6 billion the Office for Budget Responsibility had forecast in November.^[1]

Chancellor Jeremy Hunt said he would “stick with his plans” to reduce debt despite the surprise surplus, noting that “getting debt down will require some tough choices, but it is crucial to reduce the amount spent on debt interest so we can protect our public services.”^[5]

He now has as much as £30 billion for short-term giveaways in next month’s budget. Experts predict that the Energy Price Guarantee is now likely to cost only around a half of the OBR’s £12.8 billion forecast in 2023-24, thanks to lower wholesale energy prices.^[4] However, this will be largely offset by the new Energy Bills Discount Scheme for businesses with an estimated cost of £5.5 billion, providing little near-term relief against a backdrop of wider spending pressures.^[0]

0. “UK government posts unexpected budget surplus in January” Yahoo News, 21 Feb. 2023, https://news.yahoo.com/uk-government-budget-surplus-january-082559008.html

1. “UK's Surprise Budget Surplus Gives Hunt Room to Maneuver” Regina Leader Post, 21 Feb. 2023, https://leaderpost.com/pmn/business-pmn/hunt-gets-room-to-maneuver-in-uk-with-january-surplus

2. “UK government spends £5.4bn less than it takes in from taxpayers but debt interest hits January record UK spends £5.4 …” City A.M., 21 Feb. 2023, https://www.cityam.com/uk-government-spending-borrowing-tax-feb

3. “Jeremy Hunt gets pre-Budget boost with surprise £5bn government surplus” Daily Mail, 21 Feb. 2023, https://www.dailymail.co.uk/news/article-11774805/Jeremy-Hunt-gets-pre-Budget-boost-surprise-5bn-government-surplus.html

4. “Government posts surprise January budget surplus after record income tax haul” The Independent, 21 Feb. 2023, https://www.independent.co.uk/business/government-posts-surprise-january-budget-surplus-after-record-income-tax-haul-b2286252.html

5. “Top Stories: Jeremy Hunt Resists Tax Cuts Despite Surplus, Kate Forbes Doubles Down Against Gay Marriage” PoliticsHome, 21 Feb. 2023, https://www.politicshome.com/news/article/latest-politics-news-jeremy-hunt-budget-obr-tax-surplus-kate-forbes-gay-marriage-northern-ireland-protocol-deal