M1: Government Deficit and Debt Under the Maastricht Treaty

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Series Overview

The government currently provides 9 different broad measures of money in the UK economy:

  • M1: Government deficit and debt under the Maastricht Treaty
  • M2: General government gross debt at nominal value: Consolidated
  • M3: General government transactions in Maastricht debt instruments: Consolidated
  • M4: Reconciliation of general government net borrowing with general government gross consolidated debt at nominal value
  • M5: Reconciliation of general government gross consolidated debt at nominal value with ESA 2010 balance sheets
  • M6: Reconciliation of transactions in Maastricht debt instruments with ESA 2010 financial account
  • M7: Government deficit under the Maastricht Treaty: Reconciliation of versions of net borrowing
  • M8R: Government deficit and debt under the Maastricht Treaty
  • M9: Supplementary table for the financial crisis

Government deficit and debt returns - Office for National Statistics (ons.gov.uk)

Maastricht | Structure of Government Debt | Maastricht Criteria


Debt is something that is owed to someone else1. The word debt derives from the Latin word debitum, which means “thing owed2. Debitium comes from the Proto-Indo-European root *ghabh- signifying to “give and receive” with a clear sense of holding3.

The Government are a group of people who officially control a country4. Government comes from old French, which signifies control, direction and administration. The government is designed to steer, be at the helm, govern, and rule5.

Debt as defined above is not bound in the form of exchange, only the concept that there will be a perceived equal return of exchange to ensure balance between parties. The government is a group of individuals that represent a wider group (the state) and in this role takes on debt for all of the individuals within the state. Specifically, modern governments which are financed by fiat currency exchange a specific amount of their given fiat currency in return for a value (typically goods or services) in the present.

As debt requires equal returns for the present value, it is worthwhile to quickly touch on how a fiat currency derives value. Fiat is an order given by a person in authority6 which comes from the Proto-Indo-European root *bheue- signifying “to be, exist, grow7. Currency initially indicated a condition of flowing around, which evolved in flowing from person to person until ~1729AD where it was realised as a medium8.

Fiat currency can then be defined as a method of flow between individuals which was/is created by the decree of the government (representing the state) as the value behind the exchange. That is to say, fiat currency represents the value that people within the state can provide.

When a government takes on debt it is purchasing something in the present and offering in return future value from the state it represents which it does not have/does not want to use in the present.

As the state level of debt owed relative to value created increases, more of the future value possible is consumed in repayment. Therefore in order to maintain a current standard of living in the future the state must increase its capacity to create value at a rate equal to or greater than the cost of the repayment.

The Maastricht Treaty laid the foundation for the Euro and significantly increased the level of integration, especially in Mainland Europe9. When the Maastricht Treaty was agreed joining conditions were outlined which related to an economic and monetary union. One of the conditions was associated with the government budgetary positions10:

These conditions can be written as:

Government Deficit / Gross Domestic Product !=> 3%

Government Debt / Gross Domestic Product !=> 60% 
        (unless exceptional or temporary situations occur)

The Office for National Statistics (ONS) provides the underlying data to meet these criteria in its government deficit and debt publication with the earliest record of M1 provided in 1993. Below is a snap shot of the M1 data and the aforementioned raw data and ratios: