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Government deficit and debt under the Maastricht Treaty.

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M2 PRESSWIRE-31 August 2004-UK Government: Government deficit and debt under the Maastricht Treaty(C)1994-2004 M2 COMMUNICATIONS LTD

RDATE:08312004

In the calendar year 2003 general government net borrowing, as measured on the Maastricht Treaty basis, was GBP35.0 billion. This compares with net borrowing of GBP17.0 billion in 2002. Net borrowing is referred to as "government deficit" in the Maastricht Treaty.

General government net borrowing in 2003 was equivalent to 3.2 per cent of gross domestic product, compared with 1.6 per cent in 2002.

Net borrowing for 2003 exceeded three per cent, the reference value in the protocol for an excessive deficit, for the first time since 1996.

At end 2003 general government gross consolidated debt at nominal value was GBP437.4 billion, equivalent to 39.8 per cent of gross domestic product, compared with GBP400.3 billion (38.3 per cent)at the end of 2002. This is substantially below the reference point value of 60 per cent for excessive debt.

The estimates in this first release have been supplied to the European Commission for the Excessive Deficit Procedure in accordance with the Maastricht Treaty.

This release follows the European Regulation that requires payments on swaps to be treated as interest payments. This means they are part of general government net borrowing as reported for the Excessive Deficits Procedure under the Maastricht treaty. The Regulation does not amend general government net borrowing for National Accounts purposes, which is used in the Public Sector Finances First Release.

For these purposes swaps are treated as financial items. The UK government does not use swaps to the same extent as some European Union member states. The reconciliation between these two versions of net borrowing is shown in table M7.

In July 2003 the ONS announced that NHS Trusts were being reclassified from public corporations to central government. More details are available from the National Statistics website at http://www.statistics.gov.uk/nhsfoundationtrusts

This reclassification was...

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