Last month, I wrote at some length about the UK’s National Debt – see here.

We’ve been told that we face a financial Timebomb which is worrying for all of us.  I tried very hard to unearth who our creditors are. I discovered that we owed about £1.45 trillion which, to put it into perspective, is about 30% of the value of every single home in the UK.

time bomb

But, when I tried to find out who we owed the money to, I came up against a very thick brick wall.

Whatever name you give to the public debt, it’s really a loan to Britain from various sources, such as:

  • The Bank of England £375 billion
  • Overseas Lenders £?
  • Insurance Companies and Pension Funds £?
  • Building Societies £?
  • Investment Trusts £?
  • Local Authorities and Public Corporations £?
  • Private Individuals £?

You’ll see only one definite figure in the above list of creditors. The Bank of England engaged in quantitative easing (QE) which is an unconventional form of monetary policy – it created £375 billion as part of the asset purchase program which represents about a quarter of the total national debt.

But despite my efforts, I couldn’t get reliable figures for the remaining creditor groups. Shrouded in mystery. Jargon. Obfuscation. Defeat. Even my request to HM Treasury under the Freedom of Information Act, produced no meaningful answer for me.

Then along came Greece

then along came GreezeAnd there my analysis remained… Until today when I read an article about Greece’s debts by Ian Ball, the chair of CIPFA International and the former chief executive of the International Federation of Accountants: Mr Ball opened his article with these words: “Syriza’s win in the Greek elections has focused global attention on the country’s problematic public finances. But one of the myths about Greece is that is has a debt problem at all.”

Mr Ball had my attention. He added:

  • Ahead of the Greek election, many articles in the international press gave centre stage to the debt issue. Yet the election was, in one key respect, a travesty of democratic process. Electors were given a choice between political parties and policies, but the choice was based on a lie.
  • The choice was which of the competing parties would deal best with Greece’s huge and unsustainable debt. The lie was that Greece has huge and unsustainable debt. Had it been recognised that Greece’s net debt is actually less than 20% of GDP, imagine how different the election, and the competing policies, would have been. The policies would have addressed how the Greek economy could be made to function more effectively, and how the public finances should be managed.
  • First, the facts. Greece’s gross debt is widely reported as being 175% of GDP. This is a number that Klaus Regling, managing director of the European Stability Mechanism, describes as ‘meaningless’, and it is.
  • Recent articles in the New York Times and Forbes recognise that the accounting for Greek debt has been, well, Greek accounting. Measured according to International Public Sector Accounting Standards (IPSAS), the gross debt of Greece is 68% of GDP. The difference reflects, primarily, the historically unprecedented, huge effective debt reduction brought about by the 2011 and 2012 debt restructurings, which pushed debt maturities far out into the future and significantly reduced interest rates. In reporting the lower number for gross debt, international accounting standards reflect both economic reality and the time value of money, a principle that has been recognised at least since the 13th century.
  • But gross debt is not the best measure of debt burden or fiscal strength. Governments with strong track records in fiscal management regard net debt as the better measure, and Greece’s net debt is 18%. The difference between 68% and 18% reflects financial assets of the Greek government. And 18% means that Greece’s debt burden is markedly lower than that of most European governments.

Mr Ball concludes that the Greek election has been a travesty – sound and fury about a problem that does not exist.

This is all very worrying. What’s going on in the world today? Who can we believe anymore?

The UK has an election just a few months’ away.  What financial gobbledegook will be fed to the electorate over the next few weeks I wonder?

Martin Pollins

Managing Director at One Smart Place
Martin Pollins is a Chartered Accountant and MBA with wide experience in corporate finance and business management. He has served on the boards of several companies, including those listed on the London Stock Exchange, AIM and OFEX. He is Chairman and Founder of OneSmartPlace and was a Council member of the Institute of Chartered Accountants in England and Wales from 1988 to 1996. He was managing partner of PRB Martin Pollins, based in Sussex, the first Accountancy firm to advertise on British television.He went on to create and launch the CharterGroup Partnership (the UK’s first Accountancy network) and then LawGroup UK (at the time, one of the largest networks of lawyers in the UK). In recent years, he helped to raise several £millions to fund British films such as The Da Vinci Code, Bridge of San Luis Rey, Head in the Clouds and Merchant of Venice with actors such as Charlize Theron, Robert De Niro, Al Pacino, F. Murray Abraham. Kathy Bates, Gabriel Byrne, Geraldine Chaplin, Tom Hanks, Ian McKellen, Audrey Tautou, Penélope Cruz, Steven Berkoff, Lynn Collins, Jeremy Irons, Joseph Fiennes and many more.

He has written over 700 business publications (see Glossaries at and is editor of Better Business Focus (see His Blog, on a wide range of subjects can be found at:
Martin Pollins

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