Sunday, 8 March 2009

UK bailout costs - close to 100 percent of GDP

I picked up this chart from John Ashcroft's excellent blog JKA on economics UK.

As far as I can tell, John is the only one keeping tabs on the growing cost of the UK bank bailout. He estimates that the UK government has committed about £1.3 trillion. Since UK GDP is about £1.4 trillion, Brown has put just under one year of output on the line to clear up this mess.

7 comments:

Mitch said...

No problem gordon will just print more,he knows what he is doing he told us so.
He has a brain the size of a planet its just a pity its a Mars planet.

Anonymous said...

AC: "Brown has put just under one year of output on the line to clear up this mess."

Don't forget UK GDP is shrinking as output falls. So my bet is for much greater than one year GDP liability by now.

Brown is .....

Oh f***, words fail me!

Alice Cook said...

Anon 09:45

I hadn't forgot it.

Thanks for the comment...

Alice

dearieme said...

Will this prove to be the most expensive attempt to gain Party political advantage since... oh, since the Liberals took us into the First World War?

aSteve said...

Sorry, I have to pedant.

The cost of the bale-outs is nothing like £1.3bn - that's the nominal amount... pretty impressive all the same, but not - by definition - the cost.

The cost might be either far more or far less than that amount... I'm expecting far, far less - but you might think me an optimist. There's about £GDP at risk - but that is entirely different from saying that such a sum is spent and gone.

Anonymous said...

whilst we are being pedantic, it is 1.3 trillion not billion.

Looking at the market price for credit protection on the products that will be put in the asset protection scheme, i doubt the cost if much less than the 525billion. Loss rates on the loans covered by the Credit Guarantee Scheme were running at 13% BEFORE the credit crunch and the asset purchase scheme and bank bailouts are straight cash. Back of the envelope calculation would be cash cost of:

Asset Protection Scheme at 25% cost = 131bn
SLS, at 10% = 18bn
Bank bailout and asset purchase at 100% = 250bn
Credit guarantee at 15% = 38bn.

roughly 540bn at a mark to market cost... maybe the real value will be a little bit less but i doubt much more. This of course ignores the hidden cost of the debt needing to be raised to cover the cash calls.

eddowding said...

I've just posted on this over at http://www.eddowding.com/blog/2009/04/02/what-cost-the-bailouts/

But I have a question: Where has the £660bn 'lost' (post 09 March 2009 16:26) gone?