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1. Main points
This release is consistent with the information on UK deficit (or net borrowing) and debt that the UK and other European Union (EU) Member States are required to report to the European Commission under the terms of the Maastricht Treaty.
General government net borrowing (‘deficit’) was £101.8 billion in the calendar year 2014 (5.7% of GDP), an increase of £3.5 billion compared with 2013.
General government gross debt at the end of the calendar year 2014 was £1,601 billion (89.4% of GDP), an increase of £105 billion compared to the end of 2013.
A methodological revision to the treatment of Multilateral Development Banks leads to a positive contribution of £1.1 billion to net borrowing in 2014, and upwards revisions in previous years, but is offset in 2013 by updated data sources.
The figures in this bulletin are fully consistent with the data published in the Public Sector Finances bulletin of 20 March 2015 for 1997 onwards.
2. Background
The EU Government Deficit and Debt statistical bulletin is published quarterly in January, April, July and October each year, to coincide with when the UK and other European Union (EU) Member States are required to report on their deficit (or net borrowing) and debt to the European Commission.
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%
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.
The source data, and therefore the Maastricht debt and deficit figures published in this bulletin (for the time period 1997 onwards), are the same as those published in the Public Sector Finances, February 2015 statistical bulletin published on 20 March 2015. Although the Public Sector Finances bulletin now includes Maastricht debt and deficit figures there are two key differences between the main borrowing and debt measures published in the Public Sector Finances (i.e. PSNB ex and PSND ex) and the deficit and debt figures published in this bulletin:
this bulletin includes only debt and deficit recorded to central and local government, whereas the Public Sector Finances’ measures also include the debt and deficit of other public sector bodies
this bulletin reports gross debt, that is all financial liabilities of central and local government, whereas the Public Sector Finances’ headline measure is net debt, that is the financial liabilities minus liquid assets (i.e. official reserve assets and other cash or cash-like assets)
3. Summary of general government net borrowing and gross debt
This section provides the latest headline data for deficit (net borrowing) and debt, and supporting information.
The Public Sector Finances, February 2015 statistical bulletin published estimates for the headline measures of general government net borrowing and general government gross debt on 20 March 2015. This bulletin provides further information of these estimates and presents them in the context of the European Union (EU) requirements.
Table 1 shows the headline measures on a financial year and calendar year basis both as £ billion values and as a percentage of Gross Domestic Product (GDP).
Table 1: Government deficit and debt
| Calendar Years | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
| General government deficit £bn | 77.6 | 160.4 | 150.8 | 123.5 | 137.6 | 98.3 | 101.8 |
| as a percentage of GDP | 5.1 | 10.8 | 9.7 | 7.6 | 8.3 | 5.7 | 5.7 |
| General government debt at nominal values £bn | 786.3 | 975.3 | 1190.4 | 1323.7 | 1420.6 | 1495.7 | 1600.9 |
| as a percentage of GDP | 51.8 | 65.8 | 76.4 | 81.8 | 85.8 | 87.3 | 89.4 |
| Financial Years | 2007/08 | 2008/09 | 2009/10 | 2010/11 | 2011/12 | 2012/13 | 2013/14 |
| General government deficit £bn | 45.8 | 103.1 | 163.3 | 144 | 124.7 | 126 | 101.6 |
| as a percentage of GDP | 3.1 | 6.9 | 10.9 | 9.1 | 7.7 | 7.6 | 5.9 |
| General government debt at nominal values £bn | 640.7 | 823.3 | 1073.8 | 1212.1 | 1345.2 | 1420.6 | 1521.2 |
| as a percentage of GDP | 42.8 | 54.8 | 71.5 | 76.9 | 82.6 | 85.4 | 87.9 |
| Source: Office for National Statistics | |||||||
Download this table Table 1: Government deficit and debt
.xls (28.7 kB)General government net borrowing
In the calendar year 2014, the UK government deficit (net borrowing) was £101.8 billion (5.7% of GDP). This represents an increase of £3.5 billion since 2013, but is below the 2012 value of £137.6 billion (8.3% of GDP).
The deficit was above the 3% Maastricht ‘Excessive Deficit’ reference value between 2003 and 2005, and just below it in 2006. Since then it has been above the reference value.
In the financial year 2013/14, the UK government deficit (net borrowing) was £101.6 billion (5.9% of GDP). As a proportion of GDP, this is the fourth annual reduction in net borrowing since the financial year 2009/10 when it was £163.3 billion (10.9% of GDP).
The long term general government net borrowing as a percentage of GDP is illustrated in Figure 1.
Figure 1: General government net borrowing (‘deficit’) as a percentage of GDP
Source: Office for National Statistics
Notes:
- GDP = Gross Domestic Product
General government gross debt
At the end of the calendar year 2014, UK government gross debt was £1,600.9 billion (89.4% of GDP). As a proportion of GDP, this is the 12th consecutive annual increase. The general government gross debt first exceeded the 60% Maastricht ‘Excessive Deficit’ reference value in 2009 when it was £975.3 billion (65.8% of GDP).
At the end of the financial year 2013/14, UK government gross debt was £1,521.2 billion (87.9% of GDP).
The long term general government gross debt as a percentage of GDP is illustrated in Figure 2. It shows that the general government debt has increased steeply from 2007 and that between 1995 and 2001 general government gross debt as a percentage of GDP was falling.
Figure 2: General government gross debt as a percentage of GDP
Source: Office for National Statistics
Notes:
- GDP = Gross Domestic Product
4. Recent events and methodological changes
Foreign exchange trading fines
A number of UK banks were fined in November 2014 by the Financial Conduct Authority (FCA) for failures in their foreign currency operations. The fines amounted to £1.1 billion and these are included in Government receipts, and reduce the deficit (net borrowing) in 2014.
Multilateral development banks
The UK Government subscribes to international institutions that provide loans for economic and social development activities in developing countries. These institutions are referred to as multilateral development banks; examples are the International Development Agency (IDA), the European Bank for Reconstruction and Development (EBRD) and the African Development Banks (AfDB).
In this report, the treatment of UK Government subscriptions to the IDA has changed to record them as capital transfers (which impact net borrowing) instead of the previous treatment as equity injections (which don't affect net borrowing). The impact of this change is to increase net borrowing by £1.1 billion in 2014. All years from 1997 are affected, and net borrowing has been revised upwards accordingly for example by £0.9 billion in 2013.
Full details of the classification decision underlying this change is available on the ONS website.
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.
In 2014 there was a £10.9 billion transfer from the Asset Purchase Facility to HM Treasury, of which £8.7 billion affected net borrowing.
In 2013/14 there was a £31.1 billion transfer from the Asset Purchase Facility to HM Treasury. The Bank of England entrepreneurial income for 2013/14 was calculated as £12.8 billion, and this is the amount of Bank of England dividend payments that impacted on net borrowing (although only £12.2 billion of the dividend payments related to the Asset Purchase Facility).
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 directly impact on general government net borrowing or general government gross debt because it is purely a financial transaction exchanging equity for cash.
The cash received from the September 2013 sale of the government’s 6% stake (at 75p a share) was £3.2 billion.
A further sale was held on the 23/24 March 2014 of a 7.5% stake which raised £4.2 billion.
Following the March 2014 sale of shares Lloyds Banking Group was reclassified from being a public financial corporation to a private financial corporation.
Air Travel Organisers’ Licensing (ATOL)
ATOL protection contributions are classified as taxes on production as they are compulsory, unrequited payments. A recent quality assurance exercise by ONS has identified that these payments have not been recorded within taxes on production or elsewhere in the UK accounts. Data for these receipts have been included here for the first time, and reduce the deficit (net borrowing) back to 2008 by less than £0.1 billion a year.
Nôl i'r tabl cynnwys5. International comparability
All European Union (EU) Member States report their latest detailed deficit and debt information to the European Commission twice a year. Supporting statistical information, including deficit and debt values, are reported quarterly. Highlight information from both the six monthly and quarterly returns are then published by Eurostat (the European statistical agency). The debt figures in this statistical bulletin will be published by Eurostat on 21 April 2015 and the deficit figures in this statistical bulletin will be published by Eurostat on 23 April 2015.
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 UK financial year basis (i.e. April to March). In March 2015, the UK provided to Eurostat new estimates for the calendar year 2014, and revised estimates for the financial year 2013/14 (originally reported in September 2014).
The UK figures may be compared with 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 20 January 2015, 8 Member States had a deficit exceeding the 3% of GDP reference value in 2014 Q3, and 16 Member States had gross debts exceeding the 60% of GDP reference value as at the end of 2014 Q3.
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 2015 are included in this release.
Nôl i'r tabl cynnwys6. Revisions
Table M8R presents the revisions to key aggregates since the last publication of the EU Government Deficit and Debt Return in January 2015. Revisions to the data are consistent with revisions incorporated within the Public Sector Finances statistical bulletin since September 2014.
These revisions are a combination of methodological changes and data revisions. Key methodological revisions are described under ‘Recent events and methodological changes’.
Nôl i'r tabl cynnwys