The UK’s true national debt is now £3,617 billion ($5,930 billion) or £138,359 ($226,807) per household, according to the latest figures from the Centre for Policy Studies, a center-right think tank.
“With all the focus ondeficit reduction, the issue of national debt has largely been ignored. Our updated figures show that the true public sector debt is a shocking 240 percent of GDP (gross domestic product), so large that it is largely beyond comprehension,” said Ryan Bourne, researcher at the Centre for Policy Studies.
The CPS has collated its figures, which include official net debt, public pensions, Private Finance Initiative liabilities and even network rail liabilities, which he claims are hidden liabilities not visible in official figures.
He added that the figures now take full consideration of the total liabilities of the banks which have been rescued.
“The full cost of the measures used in the financial crisis that broke in 2008 has now been acknowledged, but it shows that the extent of the UK indebtedness is such that the coalition must be relentless in pursuing deficit reduction. Our figures show that this true figure is roughly the size of the average mortgage,” he added.
The UK coalition government’s official figures are much lower.
The Office for National Statistics stated public sector net debt was £2,252 billion or 149.1 percent of GDP at the end of February 2011.
However, the CPS’ figure was questioned by the Institute for Fiscal Studies, an independent microeconomic research institute, which claimed it was unhelpful to look at national debt in this way.
“It is true that the official public sector net debt figures do not include all of the pre-committed spending for future generations. While adding all these together can produce very big numbers, it is important to remember that they can be paid for from future GDP which is also considerable,” said Carl Emmerson, deputy director at the IFS.
“An analogy is that many households have mortgage debt that is 240 percent or more of their current annual income, but they will be able to use future income to repay that debt. While persisting with the Chancellor's deficit reduction planmight be the best course of action for now, he (Chancellor George Osborne) should certainly have alternative plans ready in case circumstances change significantly,” Emmerson added.