Question to the HM Treasury:

To ask Her Majesty’s Government, further to the Written Answer by Lord Deighton on 10 February (HL4482), what they consider should be prudent long-term goals for the levels of private sector, general government and financial corporation debt in the United Kingdom as a percentage of Gross Domestic Product.

The government monitors very closely the levels of debt in the economy. With regards to general government debt, we recognise that sustained action is needed to tackle the long-term debt challenge. Identifying a specific numerical level of debt above which there are sustainability risks is difficult, but both parties within the coalition agree that once the Government’s supplementary debt target has been met, any future government will need to ensure that debt continues to fall as a percentage of GDP. The government does not have an explicit target for private sector debt or financial corporation debt, but the levels should not threaten financial stability. We are adamant that we will not repeat the mistakes of the past, and that is why we have created the independent Financial Policy Committee (FPC) within the Bank of England to ensure that emerging risks and vulnerabilities across the financial system as a whole are identified, monitored and effectively addressed.