Monday, 31 January 2011

UK national debt now over two trillion pounds

Less than two weeks ago I wrote a post marking the moment the UK's national debt passed one trillion pounds. And now if you check the debt clock to the right of this article you'll see our debt is well past two trillion. Have we really borrowed another trillion in less than two weeks?

No, thankfully. What has happened is that the Office for National Statistics has decided to include the cost of bailing out the banks in the national debt. Previously this money was "off balance sheet" and wasn't being counted.

There is a fig leaf of justification for not counting the debt. We used the money to buy some big banks, notably the Royal Bank of Scotland, and Lloyd's. These are now national "assets". In theory, come the good times, we will be able to sell them, maybe even for more than we  paid. So that debt might go away again as fast as it arrived.

In theory.

1 comment:

Anonymous said...

Did we really pump £1trillion into the banking system?

Surely the equity stakes we took in RBS and Lloyds only amounted to a fraction of that sum.