Brown squeezed as PFI comes on balance sheet

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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