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.”