The deficit (or net borrowing) of general government provides the measure of the gap between expenditure and receipts. While the debt provides a measure of the total owed by government. Under the Maastricht Treaty with the EU, the UK deficit should not exceed 3% of GDP and the UK debt should not exceed 60% of GDP
In the calendar year 2013 general government deficit was £92.9 billion or 5.8% of GDP, according to the definition used for comparability across the European Union. This was fourth consecutive fall in the deficit as a percentage of GDP
General government gross debt (nominal value) was £1,461 billion or 90.6% of GDP for the calendar year 2013. Since 2002, debt as a percentage of GDP has grown in each calendar year
In the financial year 2012/13 general government deficit (or net borrowing) was £81.8 billion, equivalent to 5.2% of gross domestic product (GDP)
In the financial year 2012/13, general government gross consolidated debt (nominal value) was £1,386.7 billion, equivalent to 88.6% of GDP
General government deficit and debt estimates for the calendar year 2012 were affected by the transfer of the Royal Mail Pension Plan assets. This reduced the deficit by £28.0 billion and had the same impact on the financial year 2012/13. The asset purchase facility transfers from the Bank of England in the calendar year 2013 reduced the deficit by £18.6 billion (for the 2012/13 financial year the reduction was £6.4 billion)
The statistics presented in this publication are consistent with the definitions used by the European Commission. They fulfil the legal requirement for the UK (and other EU Member States) to report actual and planned government deficit and debt
The Government deficit and debt under the Maastricht Treaty statistical bulletin is published every six months, around the end of March and September each year, to coincide with the dates when the UK and other European Union (EU) Member States are required 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.Back to table of contents
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 with which Member States’ governments should comply. These are:
a deficit (net borrowing) 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, for this reason it 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.
General government net borrowing and gross debt
In the calendar year 2013, the UK government deficit (net borrowing) was £92.9 billion (5.8% of GDP). This is the fourth reduction in the deficit since 2009 when it was £160.9 billion (11.4% of GDP). However, in 2013 the deficit was still higher in 2013 than in 2008.
The deficit was above the 3% Maastricht reference value between 2003 and 2005. It was just below the 3% in 2006 and 2007. Since 2008, the deficit has been above 3%.
The estimates of net borrowing provided under the Maastricht Treaty include the impact of the transfer of Royal Mail Pension Plan assets and the Bank of England asset purchase facility in 2012 and 2013 respectively.
In the calendar year 2013, UK government gross debt was £1,461 billion (90.6% of GDP). The general government gross debt first exceeded the ‘excessive deficit’ reference value in 2009 when it was 67.1% of GDP.
Table 1: Government Deficit and Debt
|General government deficit £bn||40.3||73.1||160.9||149.3||117.3||95.4||92.9|
|as a percentage of GDP||2.8||5.0||11.4||10.0||7.6||6.1||5.8|
|General government debt at nominal values £bn||624.3||758.7||951.1||1,165.5||1,295.9||1,387.9||1,461.0|
|as a percentage of GDP||43.7||51.9||67.1||78.4||84.3||89.1||90.6|
|Source: Office for National Statistics|
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The long term general government gross debt as a percentage of GDP is illustrated in Figure 1. It shows that the general government debt has increased after 2008 but also demonstrates that between 1997 and 2001 UK debt as a percentage of GDP was falling.
General government net borrowing over time
The UK economy was exiting a recession in 1993. Between 1992 and 1996 net borrowing as a percentage of GDP remained above the 3% to GDP reference value for borrowing. For the three years 1999 to 2001 general government net borrowing as a percentage of GDP reduced as net borrowing was negative, indicating a surplus. The net borrowing was close to the 3% of GDP reference value for the years 2003 to 2007. Since then it has been above the 3% reference value. Government net borrowing as a percentage of GDP is illustrated in Figure 2.
Royal Mail share sale
In October 2013 the UK Government sold a 60% stake in Royal Mail, and at the same time awarded 10% plus 160,000 shares to eligible employees. Following this flotation of Royal Mail on the London Stock Exchange, ONS reviewed the classification of the company and decided that it should be classified as a Private Non-Financial Corporation (moving it from the Public to Private sector). More detail on the decision is provided in the classification article Royal Mail sale: Impacts in the National Accounts and Public Sector Finances.
Lloyds Banking Group
On 17 September 2013 the UK Government began selling part of its share holding in Lloyds Banking Group. The sale of the shares does not impact on the public sector net borrowing because it is a financial transaction. The cash received from the sale of the government’s 6% stake (at 75p a share) was £3.2 billion.
Bank of England Asset Purchase Facility Fund
The Chancellor announced on 9 November 2012 that it had been agreed with the Bank of England to transfer to the Exchequer the excess cash in the Asset Purchase Facility Fund. In line with European guidance (from Eurostat) the amount of cash that reduces net borrowing is limited by the entrepreneurial income earned by the Bank of England in the previous year.
For the calendar year 2013, there was a transfer of £40.2 billion from the Asset Purchase Facility to HM Treasury, of which £18.6 billion affected the deficit (net borrowing).
On a financial year basis in 2012/13 there was a £11.3 billion transfer from the Asset Purchase Facility to HM Treasury. Of this transfer £6.4 billion impacted on the deficit (net borrowing).
The EU Emissions Trading System (ETS) and UK Carbon Reduction Commitments (CRCs) Energy Efficiency Scheme are two environmental schemes which are administered by the Environment Agency to reduce emissions. Data from both schemes have been included in the statistics included in this release. As the schemes provide revenue to the government (classified as taxes on production in the Non-Financial Account) they reduce net borrowing.
The impact on net borrowing of the revenue from ETS was £57 million, £244 million, £341 million, £257 million and £356 million in Q2 of 2009, 2010, 2011, 2012 and 2013 respectively.
The first CRC payment of £586 million was accrued to Q3 2012 and therefore reduced net borrowing in 2012/13. Subsequent payments were received in Q3 and Q4 of 2013 totalling £601 million.Back to table of contents
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 23 April 2014.
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 provides its first estimates (2013 in the case of this bulletin) and revised estimates for the previous financial year 2012/13.
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 21 October 2013, 17 Member States had a deficit exceeding the 3% reference value and 14 Member States had gross debts exceeding the 60% reference value in 2012 Quarter 4.
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 2014 will be published on the ONS website on 22 April 2014. A similar set of tables, published as part of the September/October 2013 data transmission, were published on the ONS website on 02 October 2013.Back to table of contents
Table M8R presents the revisions to key aggregates since the last publication in October 2013. Revisions to the data are consistent with revisions incorporated within the Public Sector Finances statistical bulletin since October 2013.
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 (89.5 Kb Excel sheet) attached to this release.
Further information on these and other revisions can be found in the PSF statistical bulletin and the summary quality report (201.4 Kb Pdf) relating to EDP and PSF statistics.Back to table of contents
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