National debt could grow by £1.5trn

The financial crisis is likely to add up to £1.5 trillion to the national debt, the Office for National Statistics (ONS) said.

The surge comes from the huge liabilities of bailed out banks such as Royal Bank of Scotland and Lloyds Banking Group being taken on to the public balance sheet.

The Government has also offered a total of £330 billion in guarantees to the financial sector as of the end of September, the ONS said.

The £1.5 trillion figure represents the economic output of the entire country for one year.

Added to the latest Treasury figures - which forecast UK debt of £792 billion for the current financial year, the sum would take the UK's national debt to a whopping £2.3 trillion.

It is also at the upper end of the range put forward by the ONS when it made its initial estimate of the impact of the crisis on the public accounts in February.

The liabilities of the bail-outs has been added for classification purposes, but taxpayers are not on the hook for the whole amount.

This would mean every loan held by a bailed-out or fully-nationalised bank such as Northern Rock had turned sour, while sales back to the private sector would eventually reduce the public sector's exposure.