Bank Bailout To Add up to 1.5 trillion to Public Debt

by Charlotte Cardingham
Posted by Hannah on 19 February 2009
Bank Bailout To Add up to 1.5 trillion to Public Debt

New estimates suggest the government's recent bailout of RBS and Lloyds TSB will cost the tax payer up to 1.5 trillion.

The UK Government’s recent bailout of struggling financial giants Royal Bank of Scotland and Lloyds TSB looks set to add between £1 trillion and £1.5 trillion to national debt, figures out today have revealed.

More shocking still, this colossal intervention represents the equivalent of between 70% and 100% of Britain’s GDP (gross domestic product).

The data, released today by the Office of National Statistics, paints a sorry picture of the UK’s economy with public sector net debt already at a record high of £703.4billion, or 47.8% of GDP, in January.

So far this financial year Government borrowing has totalled £67.2billion, a figure that’s almost three times higher than the £23.1billion recorded at the same time last year.

The ONS decided to incorporate the financial impact of the bailed-out banks to the Government’s books in their analysis of public sector finances as "the Government has the ability to control the respective banks’ general corporate policy through the conditions associated with the agreements signed relating to recapitalisation."

However, while the ‘official’ figures offer a not entirely unexpected snapshot of the UK’s fiscal status, to some extent they do over exaggerate the dismal state of the economy. Primarily this is because the ONS only balanced the Government’s liquid assets in relation to their liabilities within their calculations, discounting their capital assets so as to reflect their ability to cover current debts in the short term.

The government now own a 68% stake in RBS and 43% stake in Lloyds TSB respectively.


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Your Comments

stan day
on 19 Jul 2010 03:23
can anybody answer a simple brickies question please,how much is our deficit,[ the one the coalition govt is so keen to keep banging on about] and how much did it cost to bail out the banks, and what is our structural deficit [not what it is but how much], i'm trying to ascertain in my own mind who is telling bare faced lies
Brian Dempsey
on 9 Jun 2009 14:05
What is the total in bonuses paid out to bankers, hedge-fund manager et al since New Labour came to power? Does it correlate with the amount paid out in bailout?