10th August 09 - 81.8% full

If the UK economy was a pint of foaming ale, the pot would be 81.8% full, provided that ale and debt was the same thing. Admittedly, the head needs to settle a bit and the man from the Treasury sitting opposite might take a quick swig while you are not looking but even so there is not much fresh air space.

The IMF has been doing its sums again. It reckons that the total amount of financial support handed to the UK’s financial sector is about £1.227bn or equivalent to 81.8% of GDP. Not only is this more than handed to any other major economy but it accounts for one fifth of the grand total spent by all rich (or previously rich) countries. The figure is an amalgam of :-

• Financial support for banks (18.2%)

• Capital injections (3.9%)

• Buying frozen assets (13.8%)

• Government guarantees (49.7%)

• Bank of England liquidity provisions (14.4%)

Qualifications need to be placed on adding up numbers from such diverse sources in that certain aspects are not like-for-like and guarantees may never be called upon. Nevertheless and to pile on the misery, the IMF says that Britain faces the biggest projected budget deficit of any G20 country and amounting to 13.3% of its GDP by 2010. The US deficit is 9.7%.

Before you have a pint too many and throw yourself off Westminster Bridge, Fitch, one of the three major ratings agencies, has just reaffirmed its AAA stance for the UK and given it a "stable outlook." It said it expected the eventual cost of the financial sector bail-out to fall from an initial outlay of £145bn to £40bn due to banks recovering and the Exchequer reclaiming its loans.

Confused? Me too, but the IMF does not have a reputation for getting things wrong.

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