The Government’s revenue was £30.4bn higher than its expenditure in January, a remarkable result for the Chancellor ahead of the Spring Statement in March. Supported by resilient tax receipts, a slower increase in debt interest costs, and seasonal trends, January’s surplus is the highest since monthly records began. Overall, borrowing remains close to official expectations for 2025–26, helping to ease immediate concerns about a renewed fiscal deterioration.

UK bond yields have also fallen in recent months, reflecting greater stability in the economy. This relative stability offers the government some short-term reassurance. While borrowing remains elevated by historical standards, the absence of further slippage suggests that existing fiscal plans are, for now, holding. With inflation pressures easing and growth showing tentative signs of improvement, the public finance outlook appears more predictable than it was a year ago.

However, this improving picture is not without risk. Recent political uncertainty has the potential to disrupt these projections, particularly if it delays policy decisions, weakens business confidence, or leads to changes in fiscal priorities. Uncertainty around future tax policy, spending commitments or the timing of key economic decisions could affect investment, slow growth and, in turn, put renewed pressure on government revenues.

And, of course, it is important to remember that the international bond markets really do matter. UK national debt has reached such a high level — nearing ever-closer to 100% of GDP — that volatility in the bond market can dramatically increase the cost of servicing the debt, eating into Government finances. It is important that policymakers continue to acknowledge this.