Rachel Reeves wants to take Great British Energy and the NationalWealthFund ‘off-balance sheet’ to massage the UK’s national debt figures.

What this means was written up on pp. 10-13 of this report in May downloadable here: it is the aping of the European Fund for Strategic Investments or InvestEU, which was itself modelled on New Labour’s Private Finance Initiative.

The Labour Party aims to copy the EU in building up shadow debts, the debt service for which still weighs down on the economy as the Private Finance Initiative debts continue to do – and in big size.

These are public borrow-and-spend programmes which inflate the size of the economy while not optically raising the national debt. The debt-to-GDP ratio appears to go down, except that the fully-loaded public debt increases along with the debt service cost: the interest rate is well above the respective government’s cost-of-new-debt.

Such schemes are inflationary in the short term and flatter economic growth, but they are deflationary in the long term as the debt service displaces other expenditure. That is what is happening in UK hospitals now, as anything up to 25% of their budgets goes to pay the bill left by New Labour’s PFI.

That is the price – for businesses and private persons – of having ambitious, activist spenders at the helm of the public finances. The Labour Party want to go big on ‘investment’ on Net Zero and other ‘infrastructure’, so we can expect shadow debt and hundreds of billions of pounds to be taken on.