£109bn household debt bombshell to wipe out National Insurance tax cut

  • Debt interest costs to rise by average of £1,917 per household this year, double the amount before Liz Truss’s mini budget
  • The debt bombshell will be ten times higher than the government’s National Insurance rate cut
  • Lib Dems warn Budget was a “Conservative con” with households still paying the price for Liz Truss and Kwasi Kwarteng crashing the economy

Households will spend a staggering £109 billion this year servicing their debt, including mortgages and credit cards, double the figure before Liz Truss’s mini-budget.

Figures buried in the small print of the Budget reveal the enormous household debt bombshell, which is more than ten times the Government’s £10.1 billion cut to National Insurance rates.

It means the average household will spend £3,855 this year just servicing their debts, an extra £1,917 compared to the year before the mini-budget. The share of household disposable income being spent on debt servicing is set to reach 6%, the highest level since 2010.

The Liberal Democrats said it showed that the Budget was a “Conservative con”, as the soaring cost of mortgages and other forms of credit more than wipes out any benefit from the cut to National Insurance.

Separate forecasts from the Office for Budget Responsibility show that total mortgage interest payments are expected to rise by another 26.6% in 2024, having already doubled in the last two years.

Liberal Democrat Leader Ed Davey said:

This Budget was nothing but a Conservative con, with a £109 billion household debt bombshell hidden in the small print.

Families are still paying the price for Liz Truss and Kwasi Kwarteng’s failed experiment that crashed the economy and sent mortgages spiralling.

Voters will not forgive this Conservative government for their economic vandalism.

The country urgently needs a General Election so we can kick the Conservative Party out of power and repair the damage they’ve done to living standards and our public services.

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6 Comments

  • Trouble is higher interest is taking funds from consumers with a high propensity to spend and locking it up in banks with less propensity for
    consumption. So it is massively deflationary.

  • @Alex
    The trouble is higher interest is taking funds from consumers, regardless of their propensity to spend. Similarly, increasing energy and food costs, combined with companies increasingly fleecing consumers – because they can and keeping “investors” happy with ever increasing profits is more important So whilst the monetarists bang on about money supply and inflation, in the real world there is effectively massive deflation, as people restrict spending to the increasingly expensive essentials, as their income continues to fall in real terms value.

  • Steve Trevethan 11th Mar '24 - 6:52pm

    How are the parents of the 20% + children who are permanently hungry/ missing meals/starving cause inflation?

  • Mary Fulton 11th Mar '24 - 7:05pm

    @SteveTrevethan
    Between 1% and 2% of children leaving primary school show signs of being underweight. While this does support the idea that some children miss meals – which is completely unacceptable – I do not think this supports the idea that 20% of children are permanently hungry or even starving.

  • George Thomas 11th Mar '24 - 9:26pm

    “Families are still paying the price for Liz Truss and Kwasi Kwarteng’s failed experiment that crashed the economy and sent mortgages spiralling.”

    Political messaging is still so bizarre to me. Every politician and their dog wants to blame Liz Truss and Kwasi Kwarteng but they couldn’t have made a mess of things so quickly without over a decade of bad financial policy with austerity a notably bad moment, but it’s quick and easy to single out Liz Truss which leads to quick win (if you’re not a Tory) or hope that quick distance can be achieved (if you are a Tory), so every politician agrees to dumb down the events and mislead the general public. Then they ask for our vote.

  • Steve Trevethan 12th Mar '24 - 12:21pm

    Below are sources relating to my contribution above on permanently hungry/starving children and some of the serious and optionally cruel consequences.

    http://www.theguardian.com/society/2023/mar/01/number-of-uk-children-in-food-poverty-nearly-doubles-in-a-year-to-4m

    news.arlafoods.co.uk/news/empty-tummy-disadvantage-hunger-leaves-millions-of-school-children-at-risk-of-missing-career-ambitions

    If you want any more info on the consequences of child hunger and other forms of societal deprivation, please look at the information below.

    /www.thoughtco.com/maslows-hierarchy-of-needs-4582571

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