Britain’s actual debt stands at £4.8 trillion

23 Aug 2010 08:48 AM

Responding to the latest borrowing figures from the ONS, Mark Littlewood, Director General of the Institute of Economic Affairs, expresses grave concern that these figures disguise the gravity of Britain’s financial situation.

He said:

“The latest official national debt figure of £816bn is seriously misleading. Looming in the background are pension liabilities, these should be moved to the forefront. A more accurate picture of the situation shows that Britain finds itself saddled with a national debt of nearly £5 trillion.

“The ONS should include these liabilities in their calculations. It is shocking enough to see official figures revealing a jump in national debt over the last year from the equivalent of 48% of GDP to 56%, but the grave reality is that our real national debt stands at 333% of GDP.

“The budget deficit for last month may have been lower than expected, but this provides us with little comfort. A renewed and aggressive approach to getting spending under control and the deficit eliminated must be the government’s top priority.”

To arrange an interview with Mark Littlewood, IEA Director General, please contact Ruth Porter, Communications Manager, 077 5171 7781, 020 7799 8900, rporter@iea.org.uk.

Notes to editors

In June this year the IEA published A Bankruptcy Foretold 2010: Post-Financial-Crisis Update, this report uses standard accounting practices to estimate the true level of UK government debt. The research calculates the real national debt at £4.8 trillion, a staggering 333% of GDP or £78,000 per person. The study's calculation includes liabilities such as public sector pensions and state pensions, as well as an allowance for the bailed-out banks.

The report also advocates a series of measures to tackle the debt problem, including the reform of public sector pensions and an increase in the retirement age.

The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems.

The IEA is a registered educational charity and independent of all political parties.