Bailed-out Banks to Add £1.5 Trillion to Public Debt

Royal Bank of Scotland and Lloyds TSB, the two banks bailed out by the Government, are to add between £1 trillion and £1.5 trillion to the public debt, the equivalent of between 70 and 100 per cent of GDP, the Office for National Statistics indicated this morning.

Britain’s public sector net debt is already a record high, hitting 47.8 per cent of GDP in January, official figures show. This is the highest level of debt recorded since the ONS started recording data in 1993.

The ONS said that it had decided to add the banks to the Government's books because "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 the dismal figures do not paint the whole picture, as all the liabilities of the banks are added to the public books, and only the liquid assets are taken into account. The capital assets are not included.

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