Public sector borrowing remains stubbornly high, and is forecast by the government's Office for Budget Responsibility to be 120 billion pounds for 2013.
That was ruled by the Treasury as falling outside the public sector borrowing requirement because it claimed the risk of default was so small.
When the boom period of credit expansion is coupled with growth in public sector borrowing, however, the subsequent negative impact on the economy will be worse.
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From all that we can tell, the great correction has not been turned around it has merely been slowed down, delayed, and magnified by public sector borrowing, and money-printing, on a huge scale.
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But since September 2008 there have been two definitions of public sector net borrowing and public sector net debt, depending on whether the "temporary effects of financial sector interventions" are included.
Substantial public-sector borrowing to finance public-sector spending and investing - even public-sector investment in roads, or schools, or universities, or airports, all of which would arguably increase the productive potential of the economy - is viewed as dangerous and poisonous: the conventional government view is that way lies the road to bankruptcy of the state.
If the councils borrowed the money to pay these bills, the consequent rise in public-sector borrowing would limit the government's ability to borrow money for other public services.
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Politically, this would be tempting, as continued economic growth will cut the public-sector borrowing requirement rapidly, giving a misleading impression that the underlying condition of the public finances is improving.
Public-sector borrowing will be around 12.6% of GDP this year and not far off it next.
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Gillian Tett explains that while the private sector is de-leveraging, the public sector is borrowing and spending more than ever.
Despite an economy that is weaker than almost anyone outside the left predicted two years ago, public-sector borrowing has fallen about as quickly as was forecast.
And Monday's figures showing a slight year-on-year increase in public sector net borrowing have fuelled fears that the UK could lose its coveted AAA credit rating, thereby potentially increasing the government's cost of borrowing.
You can't get out of a crisis caused by excessive public and private sector borrowing with a further increase in government borrowing.
Treasury officials are still, however, sceptical of Mr Prescott's leasing plan on the grounds that it involves no real transfer of risk to the private sector and breaks public borrowing rules.
While the private sector has deleveraged in the U.S., the public sector has filled the void with more borrowing.
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The public-sector banks' state guarantees have held down their borrowing costs and hence their lending rates.
But this also means that Petrobras's borrowing counts towards Brazil's public-sector debt, which the government, under its deal with the International Monetary Fund, must curb.
The Treasury is understandably suspicious of cosmetic wheezes that add to public borrowing without any transfer of risk to the private sector.
But when Mr Osborne drew up his plans to cut public borrowing, he did think he could count on the private sector - especially private sector demand from the rest of the world - to fill most of the gap.
But extra borrowing along these lines could make it harder to meet the second fiscal rule, which says that Public Sector Net Debt must be falling in 2015-16.
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