Brexit & EconomyPoliticsRock’s status in the balance

Rock's status in the balance

Decision expected on whether rescue vehicle for troubled bank will go on government’s balance sheet

A verdict on whether plans for a new investment vehicle for Northern Rock’s
assets will mean the bank goes on to the government’s balance sheet is expected
from the Office of National Statistics.

Chancellor Alistair Darling unveiled a plan to securitise part of the bank’s
loan book this week, by selling chunks of the bank’s assets while retaining much
of the risk.

Darling told the Commons: ‘It is for the independent Office of National
Statistics to determine whether Northern Rock is classified to the public sector
in the national accounts.

‘Any liabilities classified to the public sector would be temporary and
backed by significant assets and do not represent any meaningful measure of
fiscal sustainability.

‘The Code of Fiscal Sustainability ­ underpinned by legislation passed by
this House of Commons ­ provides for such situations.’

Opposition politicians have maintained the move was an ‘accountancy trick’
designed to help the government avoid the embarrassment of ‘nationalising’ the
bank.

Liberal Democrat Treasury spokesman Vincent Cable said: ‘This is an
accountancy trick. The government is determined to present this as not
nationalisation ­ the dreaded N-word ­ but this is what it in effect amounts
to.’

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