The headline here, that the UK has the fourth highest household debt in the world, is slightly misleading but the basic point stands: household debt is a huge problem – perhaps more so than government debt.
We talk a lot about government debt or “national debt” and rightly: ultimately in comparison with elsewhere the government can only spend what it can raise (including what it can borrow), and if it loses control of its debt it will run out of money altogether – cf. Greece and Venezuela.
However, the key there is “what it can raise”, most of which still comes from you and me. If you and I are ourselves hugely indebted, however, we are practically limited in what we can pay – in other wises, significant tax rises become impossible.
The figures are unclear, but all the evidence suggests that Northern Ireland is in an even worse place, in terms of household debt, than England, Scotland or Wales. This makes sense – spending in Northern Ireland is 4% higher than the UK average but household income is 4% lower (each excluding household taxes, as they are effectively irrelevant to the comparison).
Advice Centre will confirm the huge numbers coming through their doors with debt problems – from problems arising from endless pay-day loans right through to desperate attempts to cancel phone or TV contracts. This problem is largely classless too, affecting all social backgrounds.
A lot of this does come down to expectations. The accepted “middle-class” lifestyle – several holidays a year, premium-brand cars on the driveway (and there is a driveway), household mod-cons, regular changes of furniture and frequent nights out and city breaks – costs considerably more than the average “middle-class” household actually earns. The pressure to keep up with (or even access) this lifestyle is evident – pressure which can result not in sensible restructuring of household finance but in the development of addictions as a way of escaping the reality of the debt, which themselves add to the debt. Everyone in Northern Ireland will know people in this predicament.
This is no one’s fault in particular – it is the inevitable consequence of a consumerist culture.
The best we can do for now is identify the issue and try to be more honest about it. All thoughts welcome!