UK borrowing in current fiscal year falling faster than expected - IFS

UK borrowing is expected to fall faster in the current fiscal year than anticipated, the Institute for Fiscal Studies said Friday.

The IFS expects UK government borrowing to be lower in the year ending April 5 than in fiscal 2025. This is amid the UK government taking ‘further steps’ towards its target for a budget surplus by 2029-30.

The report by the IFS comes after the Office for National Statistics said that initial estimates show that the public sector recorded a £30.37 billion surplus in January. This was ‘the highest surplus in any month since records began in 1993’, the ONS said, multiplying from £13.36 billion in December and above the £23.1 billion surplus projected by FXStreet-cited market consensus. December’s figure was revised up from £11.58 billion.

The surplus of over £30 billion in January was more than double the figure of £14.5 billion in January 2025, the IFS highlighted. Further, it beat the Office for Budget Responsibility’s forecast from November by £6 billion.

Notably, the IFS pointed out that the UK government spent £2.3 billion on debt servicing in January, which was around £4 billion lower than what was forecast by the OBR.

IFS Research Economist Nick Ridpath said: ‘Income tax receipts had been a little disappointing over 2025, lagging behind forecasts even as inflation and wage growth exceeded expectations. But today’s data shows that self-assessment revenues in January were almost £2 billion [6%] higher than forecast. The government’s plan to run a current budget surplus from 2028-29 onwards is reliant on marked reductions in borrowing over the next few years – reductions that will be far easier to achieve if tax revenues continue to come in strongly.’

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