Northern Rock’s debt to the government was expected to shrink to £14bn in one year, the Treasury said yesterday, as it published figures showing the decision to nationalise the failed mortgage lender would lead to a sharp increase in borrowing this year. Financial Times

However, the Treasury said it would in future exclude the impact of Northern Rock from measuring whether it had met its rules for fiscal prudence.

The figures, included in the Budget small print, show the government is planning to refinance Northern Rock’s loan from the Bank of England this year by issuing more government bonds.