Plight said Fred, on the £1 trillion dilemma
With the UK's national debt predicted to reach over £1 trillion any day now, various media organisations have been trying to put that in terms that the average citizen can relate to (such as the budget projections announced recently). But frankly speaking, one trillion still has too many zeroes in it to properly get my mind around.
So the BBC made it easier for simple people like me by shrinking the whole economy down to the size of one person. This person is named 'Fred'. Fred's annual salary is £15,000, which is pretty typical. For every £1bn in government debt, that's £10 to Fred. On that £10, Fred has annual interest payments of about 20p. Which doesn't sound so bad, except £1 trillion = 1,000 billion, and the debt is likely going to go higher than that. When all is said and done, Fred's annual interest payments will be around £300 per year, or £30bn. But remember that with inflation, that number in the UK economy doubles every 15 years so proportionally, that £300 will seem smaller over time. Of course, that assumes that interest rates stay low. (cue low, foreboding strings playing in background).
The Evening Standard puts it more bluntly by dividing the national debt by the population: "The arithmetic of £1 trillion of debt is eye-watering. It is £16,700 for every man, woman and child in the country and would take 28.5 million years for someone on average London earnings to pay off." That includes the 2 unannounced Apprentice finalists currently working their socks off for the sugar daddy.
But chin up: The economy will start to grow again "towards the end of this year," Chancellor Darling said when presenting his budget back in April. Feel better now?