The CBI said that the Government needed to cut its planned spending by £120 billion over the next six years, amid forecasts that official figures due tomorrow will show that total net borrowing has surged by another £10 billion in the past month.

The true level of Government debt is equivalent to 157 per cent of national output and nearly three times as large as the £805 billion figure reported by the Office for National Statistics, according to a new book published by a centre-right think tank.

Brooks Newmark, the Conservative MP for Braintree, Essex, says in The Hidden Bombshell, published today by the Centre for Policy Studies, that government debt is actually £2,200 billion. In the book, Mr Newmark argues that the UK's public sector net debt is equivalent to £85,610 per household and in the last year has risen by £346 billion - or by £11,000 a second.

Mr Newmark arrives at his figure by saying that official numbers do not take into account the full cost of projects financed through the private finance initiative (PFI), which by his calculation adds £139 billion to the public debt. "A major attraction of PFI is that, in theory, it transfers the risk of failure of a project from the Government to the private sector. However, in reality, the Government carries most of the risk ... £139 billion is a cautious figure as it does not include local PFI projects, some of which may fail," Mr Newmark says.

Unfunded public sector pension liabilities, which the Government will need to pay, are also omitted and add a further £1,104 billion. Contingent liabilities, such as Network Rail, add another £22 billion. Finally, the £130 billion cost of recent interventions in the financial sector needs to be factored in - bringing the total "hidden liabilities" to £1,395 billion and the total debt to £2,200 billion.

The UK's latest public finance figures are expected to show that net borrowing increased by £10.4 billion in September, taking cumulative net borrowing for the year to £80 billion.

The CBI called on the Chancellor to ensure that his Pre-Budget Report includes a credible plan for balancing the public finances by 2015-16, two years earlier than set out in the March Budget, in an attempt to boost investor confidence and improve Britain's economic prospects.

The CBI said the Government will need to reduce its spending by a total of £120 billion between now and then to balance its books. About £50 billion of these savings will need to be made between now and 2013 to allow for a slower economic recovery than the Government is predicting, with a further £70 billion needed after 2013.

John Cridland, the CBI's deputy director-general, said: "We are facing the biggest peacetime deficit in our history and it is not simply going to disappear with the economic recovery. That is why we need a credible plan to convince financial markets and taxpayers alike that public finances will be restored to health.

"Just as families and businesses are tightening their belts up and down the country, the Government must decide what it can afford to deliver."

Source: http://business.timesonline.co.uk/tol/business/economics/article6880228.ece