Government finances in surplus but miss forecasts
Published On Feb 21, 2025, 2:35 AM
The UK government reported a surplus of £15.4 billion for January, the highest for that month in over 30 years, mainly driven by a rise in tax receipts. However, this figure fell short of the Office for Budget Responsibility's forecast of £20.5 billion. The report is particularly timely for Chancellor Rachel Reeves as it coincides with pressures from sluggish economic growth and rising inflation, leading to speculation about possible tax increases or spending cuts. The fiscal watchdog will announce its updated economic outlook on March 26, providing further insight into the Chancellor's financial options.
Stock Forecasts
IGOV
Negative
Given the government miss on financial forecasts and potential pressures to raise taxes or cut spending, investor sentiment may be affected negatively. Investors might anticipate a tightening fiscal policy, which could hinder overall economic growth and corporate profitability.