The taxpayer-funded £1.3 trillion bank bailout has allowed the Lloyds Group to post a pre-tax profit of £2.2 billion, somewhat better than the Royal Bank of Scotland (RBS) group which yesterday posted a £1.1 billion loss.
The 2010 operating figures for the two banking groups, were marred by RBS announcement that they had paid out £950 million in staff bonuses. The payout is a slap in the face for the taxpayers, as the state owns 84 percent of the bank.
RBS earlier tried to justify this outrageous bonus scheme by claiming that it was reducing its total bonus pool from £1.3 billion to £950 million.
The Lloyds Banking Group is 41 percent owned by the taxpayer, made a £6.3 billion loss in 2009. Its “bad debt” losses fell to £13 billion in 2010, from £23 billion the previous year.
In January this year it was revealed that Britain's debt hit £2.3 trillion after the total bank bailouts were included in the official figures.
A statement from the Office for National Statistics (ONS) said that the liabilities of RBS and the Lloyds Banking Group on its balance sheet had added £1.3 trillion to the UK's net debt, while Northern Rock and Bradford & Bingley were already in the figures.
The combined figure took the grand total to £2.32 trillion, equivalent to 154 percent of the Britain’s entire national output.
The shocking problems which this has caused will be a burden for generations to come.
The cost of paying interest on the government’s debt is very high. For example, in 2008, debt interest payments alone were £31 billion. In 2009, they were £35 billion (a figure near to the entire defence budget) and public sector debt interest payments are the fourth highest outlay after social security, health and education.
The latest debt interest payment figures have not yet been released, but economists have predicted that it will have doubled to at least £70 billion this year.
This will inevitably cause a rise in tax, a reduction in public sector spending and ultimately, a rise in interest rates as markets become more reluctant to lend to the UK government.