UK public finances show record surplus in January

By David Milliken

LONDON, Feb 20 (Reuters) - Britain's public finances showed a record monthly surplus of 30.4 billion pounds ($40.9 billion) in January, official figures showed on Friday in a boost for finance minister Rachel Reeves ahead of a fiscal update on March 3.

Economists polled by Reuters had a median forecast of a 23.8 billion pound surplus for the month, which typically brings strong inflows of revenue for the government as annual income tax bills fall due.

Since the start of the financial year in April 2025, British public borrowing totalled 112.1 billion pounds, the Office for National Statistics said, down by 11.5% from the first 10 months of the 2024/25 financial year.

This total is below the forecast of 120.4 billion pounds for this point in the financial year from the Office for Budget Responsibility, which predicts a total deficit of 138.3 billion pounds or 4.5% of national income for 2025/26.

At the start of the financial year, the OBR had forecast the government would be able to reduce borrowing to 3.9% of gross domestic product.

The OBR is due to release new growth and borrowing forecasts on March 3, when Reeves hopes the greater fiscal headroom she created in November's annual budget will be enough - unlike last year - to avoid needing to make a mid-year change in fiscal policy.

Reeves has said she wants to hold only one major fiscal event a year and from this year onwards the OBR will not formally judge if the government is on track to meet its goals at the mid-year assessment that usually takes place in March.

Britain's government aims to stop funding day-to-day public spending with borrowing by 2029/30.

($1 = 0.7439 pounds)

(Reporting by David Milliken; Editing by Kate Holton)