An estimated £1.5 trillion will be added to the national debt as a result of the financial crisis, the Office of National Statistics (ONS) has said.
The figure – which is the economic output of the entire country in a year – is down to the public balance sheet picking up the liabilities created by bailing out the Royal Bank of Scotland and Lloyds Banking Group.
The financial sector has also benefited from a total of £330 billion in guarantees being taken onto the public debt as of the end of September, the ONS added.
Added to the latest Treasury figures – which forecast UK debt of £792 billion for the current financial year, the sum would take the UK’s national debt to a whopping £2.3 trillion.
It is also at the upper end of the range put forward by the ONS when it made its initial estimate of the impact of the crisis on the public accounts in February.
The liabilities of the bail-outs have been added for classification purposes, but taxpayers are not on the hook for the whole amount.
This would mean every loan held by a bailed-out or fully-nationalised bank such as Northern Rock had turned sour, while sales back to the private sector would eventually reduce the public sector’s exposure.
But the measures taken so far added an extra £4.7 billion to net borrowing in 2008 and a further £3.3 billion in the first three quarters of 2009 – mainly from the extra money the Government needed to finance its intervention.
In April Chancellor Alistair Darling said he expected losses of up to £50 billion to the taxpayer on moves to prop up the banks – although he now expects to revise this figure lower in the forthcoming Pre-Budget statement.
