January’s data is traditionally buoyed by self-assessment tax payments; however, the shortfall means total borrowing so far this financial year has climbed to £118.2 billion — more than £11 billion higher than last year. Analysts say the figure raises questions about the chancellor’s fiscal headroom in the run-up to next month’s spring statement.
With the debt-to-GDP ratio standing at 95.3 per cent — a level last seen in the 1960s — the OBR’s forthcoming forecasts on 26 March may downgrade the government’s ability to meet its target of reducing the debt ratio by 2029. This could compel the chancellor to consider spending cuts or tax increases in the autumn budget.
Last month’s surplus was bolstered by reduced debt-servicing costs, down from £9 billion in December to £6.5 billion. However, the impact was offset by a £6 billion one-off payment for the government’s buyback of military housing from private firm Annington.
Darren Jones, chief secretary to the Treasury, said ministers remain committed to “economic stability and meeting our non-negotiable fiscal rules”, adding that the government has commenced a line-by-line spending review for the first time in 17 years to ensure every penny is spent in line with national priorities.
Jamie Young
Jamie Young is Senior Reporter at Business Matters, covering SME finance, employment law and Westminster policy since 2016. He has reported on every Budget and Autumn Statement since 2018, helped make sense of the 'covid era' and the bounce-back loan scheme from launch through the fraud investigations, and broke the magazine's coverage of the 2024 late-payment reforms. He joined Business Matters straight from completing his BA in Administration from Exeter University and is NCTJ-qualified. Reach him at jyoung@cbmeg.co.uk
