Lib Dem shadow chancellor, Vince Cable, can’t be accused of taking a soft line on highlighting the UK’s addiction to debt.
He did so in his spring conference speech three months ago, and he has now dug out figures showing the worryingly high levels of debt taken on by British households.
From today’s Independent:
The average British family now spends more of its household income on servicing debts than at any time over the past 10 years. Figures published today by the Liberal Democrats show that the average household now spends 9 per cent of its income on interest charges, a fifth more than in 1997.
The figures, based on answers to parliamentary questions tabled by the Liberal Democrats’ shadow Chancellor, Vince Cable, reveal that interest costs have risen from 7.5 per cent of household income in 1997 to 9 per cent today.
The figures also reveal that the average family’s total personal debt now accounts for 164 per cent of their annual income, the highest figure in the developed world, and the highest figure in the UK’s history. In 1997, the figure stood at 105 per cent.
Mr Cable called on Gordon Brown to make tackling debt a key priority of his term as Prime Minister. He said: “Mr Brown will move house this week while thousands of homeowners face severe financial difficulties because of the expected interest rate rises this summer and later this year.”
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2 Comments
People are certainly more vulnerable to any given rise in interest rates now than a decade ago (164/105x, in fact), BUT it is worth noting that (assuming the figures in this blog article are correct) the rise in interest payments is from 7.5% to 9% of income, that is, a rise of 1.5% of income. Or, to put it another way, it’s £25 a month extra for someone earning £20k a year.
It is hard to think that £25 a month is going to cripple either the average household, or the economy as a whole.
That is not to deny that some people are woefully overextended, or to claim that debt is a good thing, or to encourage LDV readers to take on debt, but so long as interest rates remain moderate, there is no reason to thing that this debt is going to force the economy to go belly-up.
*cough*