Money matters

[wellinghall]

Addressing financiers and Googlers on my FList -

I'm trying to find ratios of current-year government borrowing and national debt to GDP over the last thirty years - any ideas?

Thanks

Comments

[segh.livejournal.com]

I asked G and he says he couldn't say off-hand, but it should be on the Government's websites - ONS and the Treasury. Or the Big 4.

[philmophlegm.livejournal.com]

OK, this might help:

Go to http://www.statistics.gov.uk
Click on Key Statistics -> Public Sector
Then Public Sector Finances -> Time Series Data
Then Public Sector Summary Balances
Then HF6X: PSND (excluding NR) as a % of GDP
This will give you the Public Sector Net Debt to GDP ratio from 1993 to Q2 2008 (so pretty up to date, but not going back far enough).

To go back further in time (as far back as 1900 in fact), figure 3 in this Institute for Fiscal Studies paper displays the same ratio:
http://www.ifs.org.uk/bns/bn26.pdf

If you're interested in the state of national debt back to the 17th century, you might find this useful:
http://haroldchorneypoliticaleconomist.piczo.com/theuknationaldebt1690to1914?cr=2&linkvar=000044




However, there is one enormous caveat to the current national debt statistics - they don't include borrowings under the Private Finance Initiative. This scheme was introduced by Norman Lamont when he was Chancellor as a way of involving private contractors in major public sector capital projects - new hospitals etc. In the five years that the last Conservative government had PFI, £2.2billion of projects were started.

However, this government has used PFI for non-capital projects - basic public sector expenditure in fact. In the last five years of Labour government, PFI contracts add up to £35billion. If you add up all the liabilities that the taxpayer now faces in respect of PFI contracts, it's a staggering £110billion.

But the beauty of PFI if you're a dodgy politician is that currently those taxpayer liabilities are not accounted for as debt - they are accounted for as expense items as and when they are incurred. Now this is obviously nonsense, and a new accounting standard (well interpretation) (IFRIC 12 for the really geeky among you) agrees. The European Commission is probably going to make the Treasury account for PFI contracts properly. And this would make the debt to GDP ratio probably more like 45% (or more) than 38%...

...Or it would if the government hadn't come up with a brilliant wheeze to hide the liabilities off balance-sheet again. Basically, what they will do is get organisations like NHS trusts to set up charitable special purpose vehicles which will hold the PFI contracts. These will be charities and won't form part of the government accounts and again the government will be able to claim that the ratio is below 40%.

Incidentally, this trick is pretty much the same one that Enron pulled...

[wellinghall.livejournal.com]

Thanks. (I had forgotten that G used to work in the City).

[wellinghall.livejournal.com]

Thanks for that - very useful.

[segh.livejournal.com]

Oh, still does! He's what is called an NSM (non-stipendiary minister) which means he supports us by secular employment as well as having a ministry. It's an Orthodox tradition: secular priests (i.e. the ones that get married) normally work alongside their people. Monastics work too, usually at things like making icons and candles. A salaried priesthood is a Western thing.

[wellinghall.livejournal.com]

Ah, I see - thanks.

[philmophlegm.livejournal.com]

Since I wrote that post we've had the government's plan to take stakes in those banks that need a substantial capital injection. The bank probably in direst need is RBS, and if the figure quoted of a £20billion injection is close to correct, then the government would acquire control of RBS. And this should mean that RBS's liabilities (even savings accounts)should show up as part of the national debt. I suspect, however, that the government will find some dodgy argument not to include what would be a very significant amount.

[wellinghall.livejournal.com]

Oh, quite; but they wouldn't be the first government to pull fast ones with the nation's accounts!