Estimates reveal debt rise breaches rule
THE nationalisation of Northern Rock has added more than £92bn to public debt and breached the Treasury’s sustainable investment rule, according to official estimates today.
The Office for National Statistics (ONS) needs more time to assess the full impact, but suggested the move - as well as the full inclusion of the Bank of England in the figures - put the UK’s net debt at 43.1% of gross domestic product in March.
This is above the 40% ceiling dictated by the Treasury rule, although Chancellor Alistair Darling has said any impact on the public finances will be “temporary and exceptional”. The underlying measure stood at 36.7% in March.
The ONS added that it was “not possible to give a firm date” on its final calculations of Northern Rock’s impact due to the time taken to gather and check information from the lender.
While Northern Rock’s liabilities dominate the ONS’s estimates, the Bank of England was also included for accounting purposes to avoid confusing the figures after the bank began support to the lender last September.
The bank’s inclusion has been planned since 2003 but due to its relatively small impact - reducing public debt by around £2bn - the ONS has only acted now.
