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Public Sector Interventions in the Financial Crisis
This article explains the decisions of the Office for National Statistics (ONS) on the National Accounts classification of the financial crisis interventions by public sector authorities between 2007 and August 2009.
This article updates the Northern Rock article previously published in 2008 and brings together a series of similar separate articles on each intervention.
The classification decisions are consistent with international guidelines on National Accounts. In a number of areas the responses by public authorities were unprecedented and raised new issues of interpretation against international guidance on statistical classification, leading to the creation of international task forces to interpret the guidelines. The first conclusions from this work were published by Eurostat in July 2009.
There have been different types of intervention by public authorities in the UK, and these have different classification effects. The first effect is on the sector classification of the entities involved and this has brought more entities into the public sector, either through nationalisation or control. The public financial corporations sector now includes The Royal Bank of Scotland Group plc, Lloyds Banking Group plc, Northern Rock plc and Bradford and Bingley plc.
The biggest impact of the financial interventions on the UK’s fiscal measures is on public sector net debt through the reclassification of financial corporations. The exact effect of the reclassifications has not been quantified yet but is expected to be about £1.5 trillion.
Published in web format: 6 November 2009 at 9:30 am
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