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Friday, 17 July 2009

Just keeping the tally

I have been trying to keep track for the last few months of the extra amounts that the government is either spending or putting at risk in order to bail out the financial system.

At the mement I have the following amounts where the government has either invested cash into a bank, bought assets or provided guarantees against third party defaults, in which case their is no cash investment, but there is a contingent liability that should be counted against the national debt, but isn't.

So far I have: Northern Rock: £14.6 billion, Bradford & Bingley: £24 billion, Kaupthing Singer & Friedlander: £3.3 billion, Landsbanki £ 4.5 billion, Heritable £ 0.5 billion, Dunfermline BS £1.6 billion, Recapitalization of RBS, Lloyds/HBOS £ 78.1 billion, Credit Guarantee Scheme £ 250 billion, Working Capital Scheme £11.5 billion, Asset-Backed Securities Guarantee Scheme £50 billion, Asset Protection Scheme £ 465 billion. I make the total amount potentially at risk £903.9 billion, although I suspect that some of the guarantee facilitied have not been drawn

But then we have the cost of providing extra liquidity through Quantative Easing, giving us the Special Liquidity Scheme (SLS) at £185 billion and the Asset Purchase Facility (APF) for £150 billion, so I make that a grand total of £1233.9 billion.

I think that is about 88% of GDP. Trying to work out how that will impact the net debt is unclear. The quantative easing figures do not impact government borrowing because hey are simply a printing of money, but it is not at all clear how much of the other commitments hasve aready been covered by new borrowings. I suspect that only £150 billion has been already been factored into the PSBR, so if all the amounts at risk go bad, the tax payer will have to borrow another £750 billion on top of the forecast £800 billion borrowing requirement ove the next 4 years.

1 comment:

Demetrius said...

An excellent item, albeit on the conservative side. I might add on all the added PFI loadings onto the cost of public sector projects, the many and various public sector pension fund liabilities (I believe they have been propping up the police one recently), and perhaps one or two other things. One hidden cost, of course, is all the little extras being shelled out for electoral reasons.