Public debt is set to balloon to more than 160 per cent of GDP before next year’s election as the huge cost of bailing out Royal Bank of Scotland and Lloyds Banking Group is added to the Treasury’s books.

The Office for National Statistics (ONS) confirmed yesterday that the liabilities of RBS and Lloyds would probably add £1,500 billion to the country’s debt. This is at the upper end of the range it put forward when it made its initial estimate of the impact of the crisis on the public accounts in February.

It would take the total public debt to £2,300 billion, well over the country’s annual economic output (GDP) of about £1,400 billion.

Such a surge in the national debt will pile pressure on the Chancellor before the election as voters look for evidence that the Government can get the country’s finances back in shape. Public sector net debt has already spiralled to a record £824 billion, or 59 per cent of GDP, according to the most recent official figures.

The liabilities of Bradford & Bingley and Northern Rock, which were bailed out by taxpayers before RBS and Lloyds, have already added £150 billion to the public debt. RBS and Lloyds TSB are judged to be in state control because the Government has effective control of them through its shareholdings, and so must be accounted for in the national finances.

However, analysts pointed out that the figures, while shocking, were not as dire as they first appeared because the ONS takes into account only the banks’ liabilities and most liquid assets, such as cash reserves. Other assets are not accounted for.

The Internatioal Monetary Fund (IMF) said this year that the overall cost of the bank bailouts would probably be about £200 billion, or 13.4 per cent of GDP, once the Government had sold the shares it holds. The Treasury says the cost will be much less.

A Treasury spokesman said: “The Government’s interventions to support financial stability are temporary and exceptional and the liabilities of the banks who have been supported do not represent the long-term cost of these interventions to the taxpayer. In the Budget, the Government estimated that the long-term cost would be between £20 billion and £50 billion and the top of this range was included in our fiscal projections.”

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