UK Budget Surplus Narrows After Jump in Debt Interest Costs

The UK budget surplus narrowed sharply in the biggest tax month of the year as rising debt costs and cost-of-living payments hit the public finances.

(Bloomberg) — The UK budget surplus narrowed sharply in the biggest tax month of the year as rising debt costs and cost-of-living payments hit the public finances.

January normally posts a large surplus as income tax payments become due. This year, however, spending was pushed up by the fiscal consequences of the fastest inflation in decades.

The Treasury received £5.4 billion ($6.5 billion) more in tax revenue than it spent, the Office for National Statistics said Tuesday. By contrast, January last year generated a surplus of £12.5 billion pounds.

The figures are the last snapshot of the public finances before the Budget on March 15. They’re likely to fuel tensions between Chancellor Jeremy Hunt and ruling Conservative Party lawmakers who want him to cut taxes to help struggling families, revive the economy and boost their electoral fortunes.

Debt interest was £6.7 billion in January 2023, the highest January figure since monthly records began in April 1997.

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