The Government reported a significant financial surplus of £16.7 billion last month, which is over twice the surplus seen last January, according to the Office for National Statistics (ONS).
This announcement comes just before the Chancellor's Spring Budget speech on 6 March. With tax levels reaching a historic high, the Chancellor has hinted at possible tax reductions.
Despite January seeing the largest surplus since records began in 1993, it fell short of many economists' expectations. The increase in surplus is attributed to higher tax receipts and reduced government spending, including the end of household energy bill subsidies.
January often sees higher tax income due to self-assessed tax payments. Additionally, lower inflation has reduced the cost of financing the UK's national debt. For the current financial year ending in April, the Government's borrowing is projected to be £10bn less than anticipated.
However, public borrowing since April 2023 has reached £96.6bn, and national debt remains high at 96.5% of GDP, a level not seen since the early 1960s. The Government aims to reduce this debt ratio within the next five years.
Chief Secretary to the Treasury, Laura Trott, said:
"While we will not speculate over whether further reductions in tax will be affordable in the Budget, the economy is beginning to turn a corner, with inflation down from over 11% to 4%."
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