The UK government and its institutions are downplaying the real scale of national debt to justify more borrowing.
Top financial analyst, Bob Lyddon’s latest study exposes how the Office for National Statistics (ONS) deducts £200 billion from reported debt due to ‘Bank of England’ accounting tricks—creating the illusion of fiscal headroom for Labour’s borrowing plans.
Mr Lyddon says: “The Blob is gaslighting UK voters on the scale of the debts it has run up – so as to provide Reeves with illusory headroom to max out.”
The Numbers Game:
- ONS initially reported UK debt as 97.5% of GDP, then adjusted it down to 90.2% by backing out ‘Bank of England’ figures.
- Labour’s new metric—‘Public sector net liabilities’—further reduces this to 83.7%, making the debt seem even smaller.
- The reality? If you include all Bank of England liabilities, the true national debt could be as high as 140% of GDP.
Why It Matters:
- This manipulation allows Labour to claim there’s ‘space to borrow’ for national renewal projects and Net Zero policies, piling on even more debt.
- The hidden £160-195 billion in potential losses from Quantitative Easing (QE) will ultimately be paid by taxpayers.
- The government is already issuing new debt to cover these ongoing losses—making any claim of ‘manageable debt’ a dangerous fantasy.
Bottom line:
The UK’s debt crisis is worse than voters are being told. The numbers are being massaged to enable more reckless borrowing. Shouldn’t we demand transparency before signing up for even more debt?
For clarity Bob Lyddon has now issued a study on the £200 billion deduction that the Office for National Statistics (ONS) makes to the national debt on account of ‘Bank of England’:
READ BOB LYDDON’S STUDY: CLICK HERE
Writing for the Conservative Post, Mr Lyddon explains:
It is prefect example of how quangos in the Blob support one another’s narratives, in this case that the UK’s national debt is manageable and that there is space to borrow more, for example for Reeves’ national renewal and Miliband’s Net Zero follies.
The ONS publishes what was, until the October 2024 Budget, the anchor figure for the UK’s debt, called ‘Public sector net debt’. The ONS stated this to be 97.5% of the UK’s Gross Domestic Product (‘GDP’) at the time of the Budget. It then backed out about £200 billion for ‘Bank of England’, lowering the apparent debt to 90.2% of GDP.
Off the back of that Labour have announced a new measure for the UK’s debt, which is ‘Public sector net liabilities’ and it came out at the end of October as only 83.7% of GDP[1], 6.5% lower than ‘Public sector net debt with Bank of England backed out’ and 13.8% lower than the ONS’ ‘Public sector net debt’.
There is a race on to gaslight the voters by understating the national debt, meaning the amount of money that the UK’s authorities have signed us up to paying.
The further gaslighting is that there is headroom to borrow even more.
The reality is that an amount regarding ‘Bank of England’ should not be backed out but added on. The programme to which the ONS ‘largely’ attributes the £200 billion it backs out – Quantitative Easing or ‘QE’ – contains a latent loss of £160 billion if the Bank of England sells the assets in the programme, and £195 billion if the Bank holds the assets until their maturity.
Either loss will be met by HM Treasury. In fact the loss has been ongoing for some time, and the government has been forced to regularly issue new debt to reimburse the Bank’s losses.
When one starts to make adjustments for ‘Bank of England’, there is a case for going further and adding the Bank’s entire funding from third-parties to the UK’s debt.
If one does that, one would not be looking at a national debt of 83.7% of GDP (Public sector net liabilities), or 90.2% (Public sector net debt with Bank of England backed out) or 97.5% (Public sector net debt), but something as high as 140%, depending upon which elements in the Bank’s accounts one chooses to include, and what might be eligible for netting off.
Set against that, the ONS’ 90.2% of GDP for ‘Public sector net debt with Bank of England backed out’ is a non-starter, which means that Labour’s ‘Public sector net liabilities’ at 83.7% is a dangerous fantasy.
The fantasy enables Labour to start talking about a ‘national renewal’ and ‘borrowing to invest’: in other words to add to the already gargantuan pile of debt which previous governments have made the UK’s businesses and individuals liable for.
Bob Lyddon is an Independent financial analyst and a specialist consultant in international banking. Follow Bob Lyddon on Twitter here or find out more about Lyddon Consulting here.
[1] The figure given by the ONS is £2,394.3 billion
Main Image: Licensed under the Creative Commons Attribution 2.0 Generic license.
