UK debt is 'twice as much as we thought'

The true scale of the national debt is £2 trillion - more than twice the official figure, an alarming study shows.

The black hole in the public accounts equates to £78,000 for every household in the country.

The 'real' state of the national finances is exposed in a study published today by the Centre for Economics and Business Research, which warns of a series of mammoth debts that aren't revealed by the official figures.

The national debt - forecast to reach £932m by next spring - does not include a number of expensive liabilities, such as the cost of civil service and town hall pensions and projects funded under the Public Finance Initiative.

Putting these liabilities into the official figure would add £1.13 trillion to Britain's whopping overdraft, according to CEBR.

Under the worrying scenario, the debt would jump from 62% to 138% of Britain's income.

In its study, CEBR warned that the Government cannot formulate a plan to revive the economy while the liabilities remain hidden.

Charles Davis, an economist at CEBR, said: 'Clarity and transparency on the public sector finances has never been more vital in the context of recent concerns over public sector debt, particularly in the advanced economies.'

The report, which found that public sector pensions are by far the biggest liability excluded from the official record, will provide ammunition for the Government as it prepares to slash civil service pay and perks.

Unfunded public sector and local government pension liabilities, which the Government will need to pay in the future, amount to a staggering £1.08 trillion, according to CEBR.

Also written out of the accounts are the full cost of projects financed through the PFI, which by CEBR's calculation adds a further £43bn. So-called contingent liabilities, such as Network Rail, add £2bn to the total.

Also today, the Office for National Statistics confirmed that UK gross domestic product for the first quarter was 0.3%, as previously reported.

But economists warned that, although the headline figure remained unchanged, more of the growth was being accounted for by government spending – signalling that growth may fall, or even reverse, when the coalition government's tough austerity measures kick in. Read the full report...