Banking crisis don't come cheap

I just had a quick look at UK public sector indebtedness. Late last year, there was a 7 percent of GDP surge public sector debt. The data does not say why, but I am almost certain that the increased debt is due to Northern Rock. The data only goes up to August, so we haven't yet seen the impact of the Bradford and Bingley on Government balance sheet. Banking crises don't come cheap.

Here are two more interesting facts on public sector debt. First, since January 2003, public sector indebtedness has increased by 12.5 percent of GDP. Second, during that same period, the nominal value of the debt has risen by ₤296 billion.

Big government is definitely back here in the UK.