BusinessCompany NewsBrown squeezed as PFI comes on balance sheet

Brown squeezed as PFI comes on balance sheet

ONS accounting change will strain chancellor's investment rules

The ONS has decided to include billions of pounds of Private Finance Initiative capital expenditure in the UK’s net debt figures.

Link: Tories attack Brown over resource accounting

The classification change, which affects only the inital capital outlay of a PFI deal and not ongoing payments, will mean the Treasury’s forecast for public sector net debt as a share of GDP will rise closer to the chancellor’s limit of 40%.

It may also mean fewer PFI deals in future, as there is now no accounting advantage for government in tendering out to PFI contractors, the FT says.

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