Page last updated at 11:51 GMT, Wednesday, 21 May 2008 12:51 UK

UK debt 'to break' official rule

Northern Rock
Northern Rock was bailed out by the UK government

The decision to nationalise Northern Rock has pushed UK debt levels above the government's official ceiling of 40%, preliminary figures suggest.

Bailing out the lender pushed public net debt to 43.1% of gross domestic product (GDP) in March, suggests the Office for National Statistics (ONS).

The government says its accounts should not include the cost of nationalising the lender, as the move is temporary.

Excluding the cost of Northern Rock, the net debt was 36.7% in March.

The Treasury's sustainable investment rule caps debt at 40% of GDP.

The ONS could not give a firm date for when the full details of Northern Rock's impact on public sector finances will be available. It said it has to accumulate final figures from the lender.

Chancellor Alistair Darling has previously said any impact on the public finances by nationalising Northern Rock would be "temporary and exceptional".

The public sector saw a net cash payment of 990m in April, the ONS said, less than the 2.3bn expected by analysts.

"This year is likely to be a tough one for public finances," said David Page, an economist at Investec.


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