The Defict and National debt - clarification please

michaels

Better news on the deficit today, both for September (0.6bn below consensus forecast) and August (revised down by 1bn)

http://www.bbc.co.uk/news/business-41691656

However the BBC piece suggests debt has increased by 145bn (7% og GDP) in the last 12 months. This does not fit in with my understanding that the PSBR was running at about 3% of GDP.

Is this just a(nother) mistake by the BBC or is the deficit position worse than the normally quoted psbr figures would suggest?

The ONS said public sector net debt, excluding state-owned banks, had increased by £145.2bn since September last year to £1,785.3bn, equivalent to 87.2% of gross domestic product.

LHW99

The guardian seems fairly positive on this
https://www.theguardian.com/business/live/2017/oct/20/pound-dips-amid-rising-uncertainty-over-a-november-rate-rise-business-live
saying that the borrowing level was the lowest for the month of September since 2007 and that the ONS has revised the August figure downwards.
However, my understanding is that the deficit is the difference between what comes in and what goes out, so the fact that there is a deficit must mean that overall the National debt must still be increasing. We would need to turn the deficit into a surplus to have much hope of actually paying down a significant amount of National debt.
However to reduce the National debt as a proportion of GDP, then we maybe could do it by keeping the ND the same, and increasing productivity

michaels

MY problem is the quoted increase in national debt seems to be about twice the annual deficit. Is this some sort of accounting thang or is it just an error?

Tammykitty

michaels wrote: »

MY problem is the quoted increase in national debt seems to be about twice the annual deficit. Is this some sort of accounting thang or is it just an error?

There will be significant interest on such a large debt - not sure what rate is paid but it could explain this.


Even if we were breaking even or making a small surplus every year, the debt could still be increasing

Thrugelmir

Link below:-


https://visual.ons.gov.uk/the-debt-and-deficit-of-the-uk-public-sector-explained/

chappers

michaels wrote: »

Better news on the deficit today, both for September (0.6bn below consensus forecast) and August (revised down by 1bn)

http://www.bbc.co.uk/news/business-41691656

However the BBC piece suggests debt has increased by 145bn (7% og GDP) in the last 12 months. This does not fit in with my understanding that the PSBR was running at about 3% of GDP.

Is this just a(nother) mistake by the BBC or is the deficit position worse than the normally quoted psbr figures would suggest?

As well as the borrowing to cover the deficit we are borrowing circa, a further £60bn a year.

Masomnia

If only we had a Spurs supporting banker to help us out.

Could be the interest, but I'm fairly sure that's included in the deficit figure.

I'm wondering if it's the effects of inflation increasing the value of index-linked gilts.

GreatApe

chappers wrote: »

As well as the borrowing to cover the deficit we are borrowing circa, a further £60bn a year.

The Tory austerity

Spending £60 billion more than you make

Thrugelmir

Masomnia wrote: »

I'm wondering if it's the effects of inflation increasing the value of index-linked gilts.

Or HTB mortgages.

steampowered

The figures posted in the BBC article are correct. See the ONS press release here.

michaels

steampowered wrote: »

The figures posted in the BBC article are correct. See the ONS press release here.

That was an easy read...no the 'missing' 100bn of extra debt seems to be the term funding scheme of the asset purchase facility and relates to the boe 'lending' funds to banks in return for various assets commited as collateral. The loaned out funds are cash so count as govt debt, the collateral because it is not liquid enough does not count as an asset hence why according to the national accounts, debt has increased as a result of this boe activity.

What I still don't understand is where this leaves total debt, there is one suggestion that if you ignore this 'accounting' deficit then the debt to gdp ratio falls to 80% rather than the notmally quoted 87% but I don't know which gives the more realistic picture of the debt problem.