Is the Queen heading towards bankruptcy?

An annual account of the royal household's expenditure has revealed that Queen Elizabeth II will run out of funds by 2012, her diamond jubilee year, unless the government increases the civil list.

The civil list, which pays for the running of the royal household, has not increased in the last 20 years. At the moment, any request for an increase in funds would be difficult to tackle as the UK is suffering from the global economic crisis -- the worst since the second world war.

The newly published accounts reveal that the total cost of keeping the monarchy during the last financial year has increased by pound 1.5 million to pound 41.5 million, The Telegraph reports.

It also revealed that the queen raided the reserve fund by pound 6 million to supplement the civil list.

A breakdown of the figures has revealed that pound 9.9 million went for salaries, pound 1.5 million for administration, pound 700,000 for housekeeping and furnishings, pound 400,000 for ceremonial functions, pound 1.1 million for catering and hospitality and pound 600,000 on garden parties which were attended by 50,000 people.

"I think both sides will enter discussions about a new civil list by trying to find a way forward. The ambition will be to maintain head of state expenditure at current levels in real terms, which will require an increase in the civil list," said an official from Buckingham Palace.

If the Queen continues to draw on reserve funds at the current rate, she will run out of funds by the start of 2012. The reserve, which had around pound 35 million at its peak, has now diminished to pound 14 million.