15 May 2013

Update on Debt

Found a new source on UK total debt on Economics Help. Which includes this graph:

This is sort of helpful and sort of not. Help in that it shows total debt rose steeply during the period covered by the graph (could do with a but more). But's it's hard to see what was going on in the early 1990's for instance where we have a couple of little peaks. However, ca. 1994 debt started rising from about 240% of GDP and carried on until it peaked in ca. 2009 since when it has hovered around 500% of GDP.

Note that government debt only really started to rise around 2008 after the crisis hit. Before the crisis UK had low government borrowing. Actually I think Gordon Brown did start to run a deficit before the crash because he believed in the "end of boom and bust". The lack of vertical scale and the fat line on this graph obscures some detail.

However it doesn't change the overall picture. Business and households are in two main positions:

  1. too much debt and busy paying it off.
  2. saving money while waiting for better investment opportunities

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Keep is seemly & on-topic. Thanks.