Government debt breaching Maastricht Treaty
New figures from the Office for National Statistics (ONS) show that the UK is breaching its obligation under the Maastricht Treaty to keep its net borrowing under three per cent.
Other European countries currently in breach of the three per cent rule include Germany and France with Italy and Portugal also tipped to breach the budget rules.
The Chancellor Gordon Brown has previously insisted that the UK is continuing to meet his “golden rule” of borrowing only to invest.
In 2003, general government net borrowing reached £35 billion, compared to £17 billion in 2002. This is equivalent to 3.2 per cent of gross domestic product (GDP), contrasting with 1.6 per cent in 2002.
This is the first time the UK has exceeded the threshold since 1996. Net borrowing exceeded three per cent between 1991 and 1996, reaching a record high of 7.9 per cent in 1993. From 1998 to 2001 the account was placed into surplus, with there being net borrowing in 2002 for the first time since 1997.
The ONS though stresses that the UK’s debt is “substantially below the reference point value of 60 per cent for excessive debt.” As of 2003, the gross consolidated debt stood at £437.4 billion, 39.8 per cent of GDP, as compared to £400.3 billion, or 38.3 per cent at the end of 2002.
During the last decade the gross consolidated debt has always been below 60 per cent of GDP, with the highest mark being 52.3 per cent in 1996. Up until 2003, it has fallen as a percentage of GDP every year.
Under EU rules, the figures detailing government deficit must be sent to the European Commission by March 1st and September 1st each year.
