£1.5trn could be added to national debt

The financial crisis is likely to add up to £1.5 trillion to the national debt, the Office for National Statistics (ONS) said today.

The surge comes from the huge liabilities of bailed out banks such as Royal Bank of Scotland and Lloyds Banking Group being taken on to the public balance sheet.

The Government has also offered a total of £330 billion in guarantees to the financial sector as of the end of September, the ONS said.

Today's £1.5 trillion figure represents the economic output of the entire country for one year.

Added to the latest Treasury figures - which forecast UK debt of £792 billion for the current financial year, the sum would take the UK's national debt to a whopping £2.3 trillion.

It is also at the upper end of the range put forward by the ONS when it made its initial estimate of the impact of the crisis on the public accounts in February.

The liabilities of the bail-outs has been added for classification purposes, but taxpayers are not on the hook for the whole amount.

This would mean every loan held by a bailed-out or fully-nationalised bank such as Northern Rock had turned sour, while sales back to the private sector would eventually reduce the public sector's exposure.

But the measures taken so far added an extra £4.7 billion to net borrowing in 2008 and a further £3.3 billion in the first three quarters of 2009 - mainly from the extra money the Government needed to finance its intervention.

In April Chancellor Alistair Darling said he expected losses of up to £50 billion to the taxpayer on moves to prop up the banks - although he now expects to revise this figure lower in the forthcoming Pre-Budget statement.