Household debt a real crisis in NI

The Belfast Telegraph has not been having a great run recently in its choice of news priorities, but it did hit the mark on Friday with a piece on household debt in Northern Ireland. We need to have a much more practical discussion about this, as it may be the single biggest socio-economic problem we have.

I wish to return to the subject on this blog next week, but today I wish to establish two things – debt is a driver of poverty and we all have a role in overcoming it. I will look at these separately.

To be clear, this means debt is a driver of poverty as much if not more than the other way around. Thus it affects people of all income levels, and can do them serious harm in a number of ways (there is significant evidence, noted in the article, that in fact a higher percentage of people in work are affected by debt than those not it work).

This is an issue poorly served by quoting statistics, but we do need to look at some which have already appeared on this blog: Northern Ireland economic product per head is only 75% of the UK average; wages are only 89%; yet household spending is 96%. We need to be very clear about this means: we are not earning enough to spend the amount we wish to spend.

This is where we all have a role in overcoming it comes in. We are allowing public policy to be developed and public debate to take place towards a society in which retail and leisure constitute our “economy”, and the focus is solely on “spending”. In functioning economies, the “economy” clearly means the creation of valuable products and services, not least for export, and the focus is thus on productivity and value.

Let us put more bluntly what this means: Northern Ireland residents do not produce or contribute enough economically to enjoy the standard of living to which they believe they are entitled. The issue is not that they do not get enough to spend what they do, but that they do not earn enough to spend as they do. If they wish to maintain a standard of living at around the Western European average, they will have to produce and contribute as much to the global economy as other Western Europeans do.

This is not remotely a condemnation of people who have run up vast household debt. It is a condemnation of public policy and public debate which is predicated on presenting as an optimum a certain level of expenditure rather than a certain level of productivity or value. We are all guilty, at least up to a point – even those who are not actually in debt – for allowing policy and debate (and frankly social norms) to be skewed in this way.

For the week between now and the next post on the subject, I will leave just one question hanging (I would be grateful for any informed answers), but I would be grateful if readers let me know if they disagree with the premise (not for the first time, I may be wrong).

The standard “middle-class” lifestyle is seen to be a detached house (ideally in the suburbs); two cars on the driveway (one probably a premium brand); children in grammar school (and ideally the odd sports team); two holidays a year (probably both international); and frequent leisure (eating out etc) – this is the one presented in the car, insurance and holiday adverts, after all.

Yet I reckon to live such a life, particularly if there are no grandparents or other family to assist with the children, you need a household income of at least £100,000 or very close to it.

What percentage of Northern Ireland households have such an income?

 

Advertisements

5 thoughts on “Household debt a real crisis in NI

  1. ESmith says:

    I have returned to NI after many years living in South of England. It really has astonished me that people here seem to have such a high standard of living whilst salaries are so low. In the NI that I left many years ago middle class people of my parent’s generation had a horror of being in debt but that appears now to have been replaced in subsequent generations with a sense of entitlement. People here have their heads in the sand on many issues.

    • My perception is the same. It was once unusual even to buy a car on credit. My mother still lives in fear of debt. That is not always a good thing, by the way – an entrepreneurial country will always allow managed credit (and therefore debt) up to a point.

      There are some astonishing examples of that “entitlement” – and in my experience predominantly among those who otherwise claim to be on the “left”. Whatever happened to the workers?!

  2. ESmith says:

    I work in Finance so agree that managed credit is necessary to develop business and most people need a mortgage if they aspire to owning their own home. Problems arise when people mindlessly borrow money without a plan as to how and when this will be repaid.
    I have been back here for over a year now and am enjoying the more relaxed lifestyle, friendly people and being close to my family. However working here for the first time (I went to school and was a student here but left shortly afterwards) has been a real eye opener as it has been like stepping back into the 80s. Perhaps this is a topic you could take up sometime as it’s clear that if this country is to move forward and attract the best people change is urgently required.

  3. Violet says:

    I live and work in NI as a care assistant in a nursing home for 30hrs a week. My earnings are just over 10,000 per annum. I am paid on a monthly basis and my outgoings are – Food, oil, electric, telephone, petrol and rent. When all these bills are paid I have very little if anything left to actually enjoy. I can’t afford to go to the hairdressers or the dentist and my social life is very much compromised as I can’t afford to go out say for meals, cinema etc. I just feel like I’m working all the time to pay bills. Another £100 pounds per week would make a big difference to me. Debt is not always for luxury items sometimes it is the only way to put food on the table. That is the reality if the NI we live in.

    • Violet,

      Welcome. Thanks for that clear example.

      You are a good example, unfortunately, of low pay problem we have in some sectors – another consequence of failed economic policy.

      If we were, overall, a more productive economy, we would be able to pay carers (in every sense) more.

      Do you know how your income compares with elsewhere in Europe/North America?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: