PwC comments on ONS January 2024 public sector finances

Commenting on the latest ONS data, Gora Suri, economist at PwC UK, says:

“Public sector net borrowing was in a £16.7bn surplus in January 2024. January tax receipts are typically higher than in other months due to receipts from self-assessed taxes but nevertheless, this represents the largest surplus since monthly records began just over three decades ago.

“Debt interest payments in January 2024 stood at £4.4bn, which is around 45% lower than in January 2023. This is largely due to the impact on index-linked gilts of downward movements in the Retail Prices Index, which has fallen by almost two-thirds since late 2022. As inflationary pressures continue to ease over the coming months, this should reduce the burden of interest payments on the public purse.

“All eyes are on the Chancellor ahead of the upcoming Spring Budget. With the OBR’s final forecast assumptions now locked in, Hunt is likely to have limited scope for tax cuts or additional spending compared to his predecessors. The Chancellor may have more headroom than the OBR expected in November, due to falls in market expectations for interest rates and gilt yields, but lower tax revenues from a smaller cash economy may push headroom down.”

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