Britain’s Public Debt: Up By 1.4 Trillion Pounds This Week

Ted Bromund / February 20, 2009

On Monday, if you accept the OECD’s figures, Britain’s public debt was 42% of GDP, or about 600 million pounds. Today, Britain’s public debt is about 142% of GDP, or about 2 trillion pounds. In one week, Britain’s debt has increased by 1.4 trillion pounds. That’s 2 trillion dollars of debt added in a single week. It’s likely the fastest, largest increase in net national indebtedness in the history of the world.

What happened? On Thursday, Britain’s Office of National Statistics ruled that the Royal Bank of Scotland and Lloyds (which had already taken over HBOS) are, thanks to the recapitalization agreements reached on October 13, now in the public sector. That is, they have been nationalized. Therefore, their liabilities belong on the national accounts.

ONS is disturbingly vague about just how large those liabilities are, noting only that the valuation process will take time. That’s undoubtedly true, but the fact that no one know for sure what the real position is shows just how bad the situation has become. But ONS did provide a tentative estimate: “the addition to Public Sector Net Debt is likely to be in the range between £1 trillion and £1.5 trillion.”

That’s not an accurate picture of the size of the banking sector’s liabilities, of course. (more…)