This statistics bulletin on government deficit and debt under the Maastricht Treaty is published every six months, at the end of March and September each year to coincide with the dates when the UK and other EU Member States are obliged to report to the European Commission their actual and planned government deficit and debt.
The source data for this publication are the same as those used in compiling the monthly Public Sector Finances bulletin. However, there are three main differences between this bulletin and the Public Sector Finances.
This bulletin includes only debt and deficit recorded to central and local government, whereas the Public Sector Finance bulletin also includes measures of other public sector bodies.
This bulletin reports gross debt, that is all financial liabilities of central and local government, whereas the Public Sector Finance bulletin headline figure is net debt, that is the financial liabilities minus liquid assets (mainly in the form of cash deposits).
General government net borrowing as reported in this bulletin differs a little from that in the Public Sector Finances bulletin in order to make it fully consistent with guidance in the Manual on Government Deficit and Debt.
Annex A contains full details of these differences and a quantification of the size.
|General government deficit £bn||73.1||160.8||149.6||118.6||97.8|
|as a percentage of GDP||5.1||11.5||10.2||7.8||6.3|
|General government debt at nominal values £bn||759.0||950.8||1,164.8||1,295.4||1,387.4|
|as a percentage of GDP||52.7||67.8||79.4||85.5||90.0|
Article 126 of the Treaty on the Functioning of the European Union (EU) obliges member states to avoid excessive budgetary deficits. The Protocol on the Excessive Deficit Procedure, annexed to the Maastricht Treaty, defines two criteria and reference values for compliance. These are a deficit to Gross Domestic Product (GDP) ratio of 3%, and a debt to GDP ratio of 60%.
The deficit is a measure of how much the government has to borrow to cover its expenditure once revenue has been netted off. This is also known as net borrowing. The monetary values quoted are in ‘current prices’, that is, they represent the price of borrowing in the year to which they relate without any adjustments for inflation. Thus for comparisons over time the figures as a percentage of GDP (also measured in current prices) are used to provide a comparable time series.
In 2012, the UK government deficit stood at £97.8 billion (6.3% of GDP). This has fallen for the third year running after rising from 2.8% of GDP in 2007 to a peak in 2009 at 11.5% of GDP. The calendar year deficit values are summarised in Table 1 and illustrated in Figure 2.
At the end of December 2012, UK government gross debt was £1,387.4 billion (90.0% of GDP). The general government gross debt first exceeded the ‘excessive deficit’ reference value in 2009 when it was 67.8% of GDP at the end of December 2009.
After the recession of 1993 ended, net borrowing as a percentage of GDP remained above the 3% figure until 1997. Between then and the start of the recession in 2008, the deficit ranged between -3.6% of GDP in 2000 (a surplus) and 3.5% of GDP in 2004. The long term general government net borrowing as a percentage of GDP is illustrated in Figure 2.
As a percentage of GDP, gross debt has risen every year since the end of December 2002. Prior to 2002, gross debt had been falling since December 1996 when it was at 50.4% of GDP. The long term general government gross debt as a percentage of GDP is illustrated in Figure 1.
All European Union (EU) Member States report their latest deficit and debt values to the European Commission twice a year, which are then published by Eurostat (the European statistical agency). The figures in this statistical bulletin will be published by Eurostat on 22 April 2013.
The tables in this bulletin present the UK Government debt and deficit position at the end of both the financial and calendar years. The United Kingdom, uniquely within the European Union, is assessed against the deficit and debt on a financial year basis. In March/April the UK provide their first estimates for the previous calendar year (2012 in the case of this bulletin) and revised estimates for the previous financial year (2011/12 in this case). In September/October the UK provide revised estimates for the calendar year and first estimates for the latest completed financial year.
The UK figures may be compared to those of other EU Member States on the Government Finance Statistics section of the Eurostat website. The latest UK government deficit and debt figures exceed the reference values set out in the Protocol on the Excessive Deficit Procedure. According to the last deficit and debt figures published on 22 October 2012, 17 Member States had a deficit in 2011 exceeding the 3% reference value and 14 Member States had gross debts exceeding the 60% reference value.
While the key statistics provided to Eurostat are those of general government consolidated gross debt and general government net borrowing (or deficit) detailed datasets showing the components of the debt and deficit statistics, as well as supplementary government finance statistics, are also supplied by Member States. A full set of government finance tables provided by the UK to Eurostat in March / April 2013 will be published on the ONS website on 19 April 2013. A similar set of tables, published as part of the September / October 2012 data transmission, were published on the ONS website on 23 October 2012.
As noted in the previous statistical bulletin of September 2012, ONS has reclassified NRAM and B&B plc as central government bodies, with effect from January 2010 and July 2010 respectively. This reclassification is in line with revised international guidance in Eurostat's Manual on Government Deficit and Debt. These financial corporations came into public ownership in 2008/9 and prior to their classification in central government were classified as public financial corporations. Further information on the reclassification is available in the ONS news release, published 28 September 2012.
In the previous statistical bulletin initial estimates were made as to the impact of the reclassification of the two financial corporations on general government net borrowing and gross debt. In September 2012, sufficient data had not been obtained to implement the reclassification within the Public Sector Finances statistical bulletin and so the impact of the reclassification was shown in the Government Deficit and Debt statistical bulletin as a conceptual difference between the two bulletins.
The reclassification of NRAM and B&B was implemented within the Public Sector Finances, January 2013 statistical bulletin, published on 21 February 2013. Because of this NRAM and B&B debt and deficit figures are no longer showing as conceptual differences between the PSF bulletin and this bulletin.
The latest estimates are that the impact of the NRAM and B&B reclassification has led to the following impacts on the key measure of general government deficit and gross debt:
a decrease in the deficit in 2010 of £663 million
a decrease in the deficit in 2011 of £757 million
a decrease in the deficit in 2012 of £962 million
an increase in debt at the end of 2010 of £57.4 billion
an increase in debt at the end of 2011 of £45.2 billion
an increase in debt at the end of 2012 of £39.7 billion
As the data are more complete in coverage than those available in September 2012 there have been a number of revisions resulting from the improved implementation. More information on the revisions can be found in the “Revisions” section of this bulletin.
Table M8R presents the revisions to key aggregates since the last publication in September 2012. Revisions to the data are consistent with revisions incorporated within the Public Sector Finances statistical bulletin since September 2012.
There are no revisions to either general government deficit or gross debt prior to 2008. In general, the scale of the revisions is well within what might be reasonably expected based on revisions in previous years. For more information on these revisions see the revisions analysis (83.5 Kb Excel sheet) attached to this release.
Revisions to the deficit in 2008 and 2009 are very small (£3 million and £38 million respectively) and relate to central government receipt data. The upward revision of £172 million in 2010 is largely due to revised data for Northern Rock Asset Management (NRAM) and Bradford &Bingley (B&B) in this period. The downward revision to the deficit in 2011 of £317 million relates mainly to the replacement of provisional estimates with final estimates for local government data for the 2011/12 financial year.
The general government gross debt revision of £5.4bn in 2008 is as a result of correcting a previous error identified in the treatment of some transactions between government and the Financial Services Compensation Scheme (FSCS). The debt revisions in 2010 and 2011 are largely due to revised data for Northern Rock Asset Management (NRAM) and Bradford & Bingley (B&B) in this period.
Further information on these and other revisions can be found in the PSF statistical bulletin and the
summary quality report (109.6 Kb Pdf)
relating to EDP and PSF statistics.
The UK publishes a monthly Public Sector Finances (PSF) statistical bulletin which provides the latest estimates of the public sector finances, including figures for public sector net borrowing and public sector net debt. These Public Sector Finances (PSF) statistical bulletins focus on data for the latest month and the financial year to date, although they also include long time series which put the data in context.
The PSF statistics, and the statistics in this bulletin, are both compiled using National Account concepts and rules, following the European System of Accounts 1995 (ESA95) and additional guidance in the Manual on Government Deficit and Debt.
Although the statistics in the PSF bulletin and this bulletin are compiled using the same data sources and following the same national accounting practices, there are some differences between the coverage of the two bulletins and the definitions of the key statistical aggregates.
There are three main differences between the figures. The first is one of coverage. The Public Sector Finances covers the entire public sector while the figures in this bulletin are restricted to general government. The general government sector, as defined in National Accounts, covers agencies and departments within central government and within local government. The public sector is a wider concept covering publicly-controlled companies as well as general government.
This means that this bulletin does not include the gross debt of public corporations. In the latest PSF bulletin, at the end of 2012, the reported gross debt for non-financial public corporations was £10 billion and for financial public corporation was £1,799 billion.
The second difference is that the net debt measure reported in the PSF bulletin (and used by the UK Government for budget and forecast purposes) is calculated as the total stock of financial liabilities minus liquid assets. By contrast, the debt measure used as part of the Excessive Deficit Procedure (EDP) and reported in this bulletin is a gross debt measure which is calculated as the total stock of all financial liabilities.
The general government gross debt is higher than the general government net debt found by the total value of all general government liquid assets. The latest PSF bulletin estimates general government liquid assets at the end of December 2012 to be £143.5 billion.
The third difference is that the EDP deficit statistics are compiled according to EDP rules described in the relevant legislation and following guidance in the Manual on Government Deficit and Debt. In two areas these rules and guidelines differ from those following in producing the net borrowing measure published in the PSF statistical bulletin.
The first area of difference is that general government net borrowing published in the PSF statistical bulletin (in accordance with ESA95 rules) excludes interest payments or receipts received as part of financial instruments known as swaps and forward rate agreements. However, the deficit measure in this bulletin explicitly includes these interest payments/receipts within the definition of the general government net borrowing.
A swap agreement is one where two parties agree to exchange cash flows. As an example, the Government may hold foreign currency bonds, whose interest payments are subject to variable exchange rates. In order to receive a more steady cash flow the Government may enter a swap agreement with another organisation where they agree to swap the interest flow of the foreign currency bonds with an alternative interest flow provided by the counterpart organisation. This is an illustrative example only and governments may enter into swap and forward rate agreements for a wide range of reasons.
The second area of difference is in the recording of expenditure on single use military equipment. In the UK National Accounts and PSF this expenditure is recorded on an accrued basis in line with International Financial Reporting Standards (IFRS). However, in this publication the military expenditure is accrued to the point of delivery of the goods, in line with Eurostat guidance in the Manual on Government Deficit and Debt.
The effect of including swap and forward rate agreements can increase or decrease general government net borrowing. Similarly, accruing military goods expenditure at the point of delivery, instead of as stage payments are made, can drive net borrowing up or down. In 2012, the adjustment for swap and forward rate agreements amounted to a decrease in net borrowing of £12 million, and the adjustment for military expenditure a decrease in net borrowing of £2,049 million.
A full reconciliation of the two deficit measures back to 1992/93 is available within Table M7 of this statistical bulletin.
For further information on the methodology employed within the Public Sector Finances and this bulletin, then a methodological guide (360.3 Kb Pdf) can be found on the ONS website.
There are nine tables included as part of this bulletin. Most tables extend back to 1992/93 in financial years and 1992 in calendar years. However, tables M5, M6 and M9 only cover more recent periods.
All values in the tables are at current prices and are not seasonally adjusted. The debt figures are at nominal value. That is the debt is valued at the face value of the debt, which is what the government will be liable to pay, and not the market value of the debt.
Table M1 shows the general government deficit and debt (in £ million and as a percentage of GDP).
Table M2 shows the general government debt by financial instrument (in £ million).
Table M3 shows transactions (ie changes) in general government debt by financial instrument (in £ million).
Table M4 shows how the deficit can be reconciled with the changes in gross debt (in £ million).
Table M5 shows how the unconsolidated financial liabilities of central government and local government are consolidated to arrive at general government consolidated gross debt (in £ million).
Table M6 shows how the unconsolidated transactions (i.e. changes) in financial liabilities of central government and local government are consolidated to arrive at consolidated transactions in general government gross debt (in £ million).
Table M7 shows how general government net borrowing (ie deficit) can be reconciled with the general government net borrowing reported in the Public Sector Finances bulletin of 21 March 2013 (in £ million and as a percentage of GDP).
Table M8R shows revisions in deficit and debt between the figures published in this bulletin and those published in the last bulletin on 28 September 2012 (in £ million and as a percentage of GDP)
Table M9 relates to government activities undertaken to support financial institutions during the financial crisis. It does not include wider economic stimulus packages. The table is presented into two parts. Part 1 shows the impact on government deficit from both the expenditure undertaken by government and the revenue received as part of these support measures.
Part 2 shows the impact on the government balance sheet from the support measures. Part 2 also includes estimates of the contingent liabilities that government is exposed to through the activities undertaken to support financial institutions. All figures are in £ million.
Government deficit and debt under the Maastricht Treaty
Article 126 of the Treaty on the Functioning of the European Union (commonly known as the Maastricht Treaty) obliges member states to avoid excessive budgetary deficits. The Protocol on the Excessive Deficit Procedure, annexed to the Maastricht Treaty, defines two criteria and reference values for compliance. These are a deficit to Gross Domestic Product (GDP) ratio of 3%, and a debt to GDP ratio of 60%.
EU Member States have to report their actual and planned government deficits, and their levels of debt, to the European Commission to specific deadlines twice each year. The estimates in this statistical bulletin are supplied to the European Commission by ONS in accordance with the schedules in the Excessive Deficit Procedure. Forecasts for future years are provided separately by HM Treasury.
The first deadline (1 April) is designed so that the European Commission can gain an early sight of Member States’ debt and deficit for the previous calendar year, and the second deadline (1 October) is to receive updates to these figures. However, for the United Kingdom, uniquely within the European Union, the Stability and Growth Pact sets the reference period to be the financial year (1 April to 31 March), recognising the different budgetary year arrangements in the United Kingdom. The second deadline (1 October) thus provides for the UK the first estimate for the latest financial year.
The Protocol on the Excessive Deficit Procedure defines Government deficit and debt following the rules and principles laid out in the European System of Accounts 1995. This is also the manual that governs the United Kingdom’s National Accounts.
Data in this bulletin are consistent with those published in the latest Public Sector Finances statistical bulletin. A summary quality report (109.6 Kb Pdf) for the public sector finances is available on the ONS website. This report describes in detail the intended uses of the statistics presented in this publication, their general quality and the methods used to produce them.
The net borrowing (or deficit) data in this statistical bulletin are based on those published in the Public Sector Finances statistical bulletin of 21 March 2013, but have been modified to take account of a European Regulation that requires payments/receipts for certain financial instruments (ie swaps and forward rate agreements) to be treated as interest, and hence part of general government net borrowing as reported for the Excessive Deficit Procedure. The Regulation does not amend general government net borrowing for National Accounts purposes, which is the version presented in the Public Sector Finances Statistical Bulletin.
The reconciliation between the net borrowing published in this bulletin and that published in the Public Sector Finances (PSF) statistical bulletin of 21 March 2013 is shown in table M7. It can be seen in table M7 that the net borrowing figures do not only differ due to the different methodologies for swaps but also differ with regard to the recording of expenditure on single use military equipment. In the UK National Accounts and PSF this expenditure is currently recorded on an accrued basis in line with International Financial Reporting Standards (IFRS). However, in this publication the military expenditure is accrued to the point of delivery of the goods, in line with Eurostat guidance.
The estimate of GDP used in this bulletin is consistent with that published on 27 March 2013 in the UK National Accounts.
Relevance to users
The United Kingdom Statistics Authority conducted an assessment of the Government Deficit and Debt Statistical Bulletin in 2011 to ensure that the bulletin and its compilation methods fully comply with all requirements of the National Statistics Code of Practice. A report of their findings was published on 3 November 2011. Following work to comply with the requirements itemised in the report, the Public Sector Finances has had designation as National Statistics confirmed.
The Statistics Authority has designated these statistics as National Statistics, in accordance with the Statistics and Registration Service Act 2007 and signifying compliance with the Code of Practice for Official Statistics.
Designation can be broadly interpreted to mean that the statistics:
meet identified user needs;
are well explained and readily accessible;
are produced according to sound methods; and
are managed impartially and objectively in the public interest.
Once statistics have been designated as National Statistics it is a statutory requirement that the Code of Practice shall continue to be observed.
As part of our continuous engagement strategy, we welcome comments on how else we might improve the Government Deficit and Debt Statistical Bulletin. If you have recommendations for the improvement of the Government Deficit and Debt Statistical Bulletin, please email them to email@example.com or see the contact details below.
Data in this bulletin are consistent with those published in the latest Public Sector Finances statistical bulletin. The public sector finances revisions’ policy was reviewed at the end of 2012 and subsequently updated to more fully reflect compilation processes. The Public Sector Revisions’ policy (59.3 Kb Pdf) is available on the ONS website.
Revisions to the EDP data are consistent with the revisions period in the Public Sector Finances statistical bulletin, which aims to incorporate the most up-to-date information for all time periods and therefore revisions can be included for any time periods. A summary quality report can be found on the ONS website which provides further information on how the quality of the statistical measures is assured.
One indication of the reliability of the key indicators in this bulletin can be obtained by monitoring the size of revisions. For this reason a new Annex has been introduced showing the magnitude of revisions between publications for general government net borrowing and general government consolidated gross debt. A summary of the information in the Annex can be found in the Summary table of revision indicators attached below.
|Latest calendar year value||Average calendar year revision1||Average (absolute) calendar year revision 1|
|General Government Net Borrowing, £m (MDUK)||97,794||-3,230||3,671|
|General Government Net Debt, £m (YEQG)||1,387,436||1,373||1,502|
Net Borrowing average revision relates to the last 8 years but the Net Debt average revision excludes the latest year so as to exclude distorting effects of the implementation of the classification change for Northern Rock Asset Management and Bradford & Bingley.
Table M8R and the “Revisions” section in the bulletin provide more detailed information on revisions between this publication and the previous publication in September 2012.
The latest public sector finances statistical bulletin is available on the ONS website.
Detailed data supplied to Eurostat under the Excessive Deficit Procedure are available on both the ONS website and on the Eurostat website. The latest available data are those published in October 2012. Once finalised the detailed data relating to this publication will be published on 19 April 2013.
Eurostat analyse all data provided by Member States and publish a press release which places the UK figures in a European context and provides commentary on any issues specific to member states.
Details of the revisions policy for this and the other public sector finances statistical bulletins is available in the Public Sector Revisions’ policy (59.3 Kb Pdf) .
Information on the classification of institutional units for the purposes of National Accounts can be found at the National Accounts classifications pages.
An inventory (133.3 Kb Pdf) of the data sources used within the data supplied for the Excessive Deficit Procedure is available on the ONS website.
A list of ministers and officials with pre-publication access to the contents of this bulletin is available on request. In addition some members of the Treasury’s Fiscal Statistics and Policy (FSP) team will have access to them at all stages, because they are involved in the compilation or quality assurance of the data, and some members of the Treasury’s Communications team will see the HM Treasury bulletin, but only within the 24 hour pre-release period, because they place the data on the website.
Complete runs of series in the Public Sector Finances bulletin are available to download free of charge here. An electronic dataset is made available one working day after publication of the Public Sector Finances Statistical Bulletin. The dataset contains quarterly data consistent with the latest Public Sector Finances Statistical Bulletin, analysed by economic category and subsector.
Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: firstname.lastname@example.org
These National Statistics are produced to high professional standards and released according to the arrangements approved by the UK Statistics Authority.
|David Bailey||+44 (0)1633 455668||Public Sector Financesemail@example.com|