Pension deficit puts UK £5trn in debt
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The Institute of Economic Affairs has warned that the Government is grossly underestimating the size of the UK deficit by ignoring pension liabilities.
Last week the Office of National Statistics reported that the UK national debt was falling, with an annualised figure of £816bn. But IEA director general Mark Littlewood says these figures “disguise the gravity of Britain’s financial situation”.
He says: “The latest official national debt figure 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 £5trn.”
The IEA says that by including pension liabilities into the calculations for gross national debt, the figure leaps to £4.8trn. The official figures state the debt has risen from 48 per cent of GDP in July 2009 to 56 per cent GDP last month, but Littlewood says the real figure is closer to 333 per cent of GDP.
He says: “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.”
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Readers' comments (2)
Julian Stevens | 23 Aug 2010 6:06 pm
Presumably these hugely enhanced estimates are in respect of all those gold plated public sector pensions (excluding, of course, the FSA which, although a public sector body, is funded by the private sector), as the IEA is unconcerned with private sector liabilities.
Measures could be instituted to start bringing the deficit down ~ not least banning all those monumentally expensive yet patently phoney redundancy early retirement deals. Three months later, as often as not, the lucky recipient is brought back on a "consultancy" basis and paid even more. It's just blatant taxpayer fraud.
But does the new government have the bottle to go head to head with the public sector unions to put a stop to such practices, because that's what it'll come down to.
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P T Withers | 25 Oct 2010 6:56 pm
All of this hidden liability including PFI's etc should be revealed.Nothing should be off balance sheet.How do we get this to happen?
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