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.
