How the IMF withdrew its shock-horror number on UK toxic debt
The IMF Global Financial Stability Report, issued yesterday, was always going to have a top-line horror story on toxic debt. Instead of a $2 trillion write off the world is facing a $4 trillion write off. Fingers hovering above the keyboard and fighting off jet lag I was preparing to wade through this to see if they could put a figure on the UK's toxic debt bill.
The Treasury was "not steering us away" from the FT's proposed price tag of £60bn - although indicating that this was "cautious" ie high and even musing privately that Britain would not lose any money at all on its bank bailout insurance scheme.
The Conservatives, acting fast, found the number and did the sums. 13.4% of Britain's GDP would be needed to cover the fiscal cost of the bailouts. That's £200bn said the Tories and hit the airwaves.
There was a slight problem: these were not like for like figures. The IMF's figure included not just losses on insuring toxic debt, but also actions like Northern Rock and even proposed losses on Bank of England operations to shore up the credit markets.
However that did not invalidate the Tories' point. The £200bn figure is a massive hit to the UK taxpayer, much bigger than the coy briefings received by the FT and pretty annoying if you are a taxpayer. That was the story at 5pm as we finished filming our Newsnight pre-budget piece.
At 9pm I finally got the Treasury to respond to the Conservatives' press release and the IMF report. The figure is wrong, they told me. They had raised this with the IMF and the IMF would be withdrawing the figure. It should be in a range between 6-13% of GDP said the Treasury. The word "bonkers" came up in the conversation, I seem to remember.
I phoned the IMF. They tried to put me through to an economist dealing with the case but nobody ever returned my voicemail request for clarification. I started hitting the refresh button on the PDF file of the report and, lo, at around 9.45 pm, discovered that it was still there but with the relevant table missing and covered by the words "Under Embargo". Now embargo is a term for holding back information you have not yet released, not withdrawing information you have already released. This latter is called a U-turn not an embargo, or as they say in Private Eye, a reverse-ferret.
The IMF's new version of the report (see p44 here, the erroneous original has disappeared into that memory tube Winston Smith uses in Nineteen Eighty Four) states that the cost will be 9.1% of GDP will be needed to cover bailouts, which is apparently £130bn. But weirdly the new list of countries mentioned is shorter than the old one. And Britain's figure is not "in a range" between 6-13% but almost exactly halfway along that range.
So maybe there is an interesting explanation of why the original list got made, why it was so much worse for the UK, why Ireland was on it and is now not on it, and why it got pulled. Unfortunately I do not have time to find out because it is Budget Day. There you go.