PwC comments on the latest ONS Public Sector Finance data

Commenting on the latest ONS public sector finance data, Nabil Taleb, economist at PwC UK, says:

“Public sector net borrowing was in surplus of £15.4bn in January 2025, £0.8bn higher than January 2024 and the highest January since records began. 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 reached £6.5bn in January, the second highest January figure since monthly records began 27 years ago. This reflects the fiscal challenge the Chancellor faces. Higher debt servicing costs as a share of total revenues will leave the public finances more exposed to future economic shocks. 

“There’s no respite for Reeves. Borrowing costs remain under pressure as inflation proves stickier than expected, potentially slowing the Bank of England’s rate cuts and keeping debt servicing costs elevated. At the same time, Labour’s commitment to increased defence spending adds further fiscal strain. So far, Reeves has held the line on Labour’s pledges, but with limited fiscal headroom, holding that line will become increasingly challenging."

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