Northern Rock is set to be on the government’s balance sheet, but will not be included in calculations of government debt for the purposes of its sustainability rules, Alistair Darling has said
Though the Office for National Statistics has said the stricken bank will be
on the books, he said including the liabilities in his debt calculations would
‘It would be absolutely bonkers to take account of Northern Rock in relation
to the sustainable investment rule because, frankly, it would mean you would
slash large amounts of public expenditure to accommodate what is a temporary
measure,’ the chancellor said at a hearing last week.
The sustainable investment rule limits government borrowing to 40% of GDP.
Northern Rock was nationalised in February after bids for the business from
Virgin and the Rock’s management team were rejected.
The Office for National Statistics, which is still calculating the precise
extent of the liabilities, has said that it will include the liabilities on
balance sheet from October 2007.
Watch the hearing at