by Mark Johnston
The latest figures from the Centre for Policy Studies, a right of centre of think tank, have advised that the national debt now sits at a staggering £3,617 billion. In other words, every household in the UK has a national debt of £138,359 tied around their neck each. This is a quite substantial amount per household.
Ryan Bourne, one of the researchers for the Centre for Policy Studies, has said “With all the focus on deficit reduction issue of national debt has largely been ignored. Our updated figures show that the true public sector debt is a shocking 240 percent of GDP (gross domestic product), so large that it is largely beyond comprehension,”
There has been a suggestion that previous figures have hidden liabilities to some extent, these have included public pensions, Private Finance Initiative liabilities and network rail liabilities. The suggestion is also that these latest round of figures take all liabilities into account, including all considerations of liabilities for banks that have been bailed out and provided additional capital or securities.
“The full cost of the measures used in the financial crisis that broke in 2008 has now been acknowledged, but it shows that the extent of the UK indebtedness is such that the coalition must be relentless in pursuing deficit reduction. Our figures show that this true figure is roughly the size of the average mortgage,” said the Centre for Policy Studies. The current government have released figures that are considerably lower than the figures from the CPS. “It is true that the official public sector net debt figures do not include all of the pre-committed spending for future generations. While adding all these together can produce very big numbers, it is important to remember that they can be paid for from future GDP which is also considerable,” Carl Emmerson, the deputy director at the IFS. “An analogy is that many households have mortgage debt that is 240 percent or more of their current annual income, but they will be able to use future income to repay that debt. While persisting with the Chancellor’s deficit reduction be the best course of action for now, he (Chancellor George Osborne) should certainly have alternative plans ready in case circumstances change significantly,” Emmerson added.
The Office of National Statistics has questioned these figures from the CPS. The ONS has advised that the UK national public sector debt is set at £875.8 billion or 58% of national Gross Domestic Product but openly admits that this excludes the financial sector. With this sector included, they advise that the figure is closer to £2,252.1 billion and closer to 149.1 per cent of GDP.
One additional issue that due to the financial crisis, the UK government has laid out an additional £500 billion of potential liabilities. The government has offered to back mortgage securities and while this money is yet to be spent could ratchet up the national debt by an additional £500 billion
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