A new International Monetary Fund (IMF) study has concluded that Britain’s underlying public finances are among the worst in the world, behind the Uganda and Kenya.
IMF economists found that since the 2008 financial crisis, £1 trillion had been wiped off UK public sector net wealth, mainly due to bank bailouts and increasing pension liabilities.
From examining the assets and liabilities of 31 countries they found that only Portugal was in a worse position than the UK.
For this particular study, instead of looking at each country’s debt and deficit (a government’s income minus its expenditure), the IMF took into account the benefit of assets such as publicly owned corporations and natural resources. The result was figures which more closely resemble a company’s balance sheet.
According to the IMF, the cost of bailing out the banks had been a significant factor in the UK’s drop down the rankings. The UK also had one of the largest pension liabilities of any nation in the study and is towards the bottom of the pile when public assets are calculated.
Using the public sector balance sheet method, countries such as Uganda and Kenya rank higher than Britain despite having smaller assets and liabilities because they have a higher net wealth relative to GDP.