Money doesn’t grow on trees, right? That’s what UK chancellor George Osborne will be sighing as he prepares for tomorrow’s annual Budget, which is expected to be stringent. But actually, some British policy-watchers think they’ve found a way to magic more money out of thin air.

It comes down to the hoary old question of the public finances. Specifically, Britain’s main measure is public sector net debt, which doesn’t match international measures such as those set out in the Maastricht Treaty: “The Maastricht debt is limited to general government whereas in the public sector finances the principal debt measure is that for the public sector,” explains the ONS.

The key difference relates to a set of organisations called “public sector trading bodies“. These are basically organisations with their own ringfenced cashflows, spending plans and budgets. The Export Credits Guarantee Department is one. So are local authority housing departments.

“Internationally the focus is on general government measures of debt and borrowing – not including the borrowing and expenditure of public sector trading bodies,” says Steve Wilcox, a professor at the University of York who’s been on a crusade to publicise this for several years. Read more