MONEY COMMENT
A Nation In Debt

By Jane Mack (TMFJane)
December 11, 2003

The Chancellor's optimistic assessment of the economy in his Pre-Budget speech yesterday sounded good on the face of it but I did wonder why he concentrated so much on the small stuff.

The important things that many of us are concerned about are failing pension funds, the struggle to get onto the property ladder and worries about the increasing amount of consumer debt.

There was barely a mention of the first two in yesterday's speech and as for the debt, well, he went and borrowed another £10 billion saying that it was only a small proportion of our national income and anyway, interest rates are nice and low at the moment so it's affordable.

Isn't that what consumers have been telling themselves in recent years? It's only a small proportion of their annual income and, anyway, interest rates are nice and low so it's affordable? Besides, didn't the Bank of England put up interest rates slightly last month to try and put a gentle brake on consumer spending? It smacks a little of do as I say but don't do as I do, to me.

The Chancellor's current net debt is about 33% of national income. That's the sort of number that would concern the likes of the Consumer Credit Counselling Service or the Citizens' Advice Bureaux if they were looking over an individual's finances.

So, if your borrowing as a proportion of income is anywhere near the Chancellor's then it's time to control your spending and work on paying off your own debts. Even if the Chancellor isn't.

Check out our Get Out of Debt Centre.