The figure of £178 billion in the Budget – for 2009/10 – is by no means the full story. For that we have to turn to the Debt Management Office, which is in charge of flogging the IOU notes. It just now confirmed that it will need £223.3 billion by the end of this financial year – £5 billion more than expected. And a staggering amount, which I suspect the government simply could not raise if it did not have the Bank of England printing presses working overtime.
Why the gulf between the two? Because of the bank crisis. This financial year a further £42 billion has needed to by pumped into the banks in various forms – not just Lloyds and RBS, but the smaller bank failures like Northern Rock and Dunfermline Building Society.
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