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£400bn black hole in Darling's figures
21 May 2009Standard & Poor's today warned of a near-£400 billion black hole in the government finances.
It said debt levels will hit 100% of gross domestic product by 2013 and remain there unless aggressive tax hikes and swingeing spending cuts are introduced.
That would amount to debts of £1644 billion in 2013 - £382 billion more than forecast by Chancellor Alistair Darling in the Budget last month.
The Chancellor predicted debt levels will hit 74.5% of GDP in 2013 having been at 43%, or £609 billion, last year.
Chiara Corsa, an economist at UniCredit, said: "This is definitely negative news. When the Budget came out I pointed out that the Government's assumptions were a bit too optimistic on the deficit and debt projections.
"Therefore I think risks that the debt to GDP ratio will rise above the projected level by 2013 are very high."
Mark Miller, an economist at Bank of Scotland Treasury Services, said: "A prospective 100% debt-to-GDP ratio is clearly on the radar screen."
