Tis the season to whip out the credit card. As I type, millions of Britons are undoubtedly flooding into shops or splashing out online full of festive panic: set spending habits to Defcon Christmas. So apologies in advance for the Scroogefest, but latest figures confirm Britain’s supposed economic recovery rests on a personal debt timebomb. When it runs out is unclear, but run out it will.

Latest borrowing figures threaten Osborne's deficit target Read more

When George Osborne became chancellor, Britons were spending £67bn less than they were earning; according to the Office of Budget Responsibility, they’re now running up a £40bn deficit. Earlier this year, the Centre for Social Justice – set up by Iain Duncan Smith himself – reported that total household debt had soared to £1.47tn, the highest level ever, and that Britons were being driven into debt to pay their bills. As a nation, household debt makes up around 135% of our personal income, and earlier this year, the OBR suggested that could reach 182% of disposable income by 2019, up from 169% when Lehman Brothers crashed. In 2013, only three other countries out of 53 surveyed had higher total household debt; per capita, Britain came 11th.

We’ve had weak growth – indeed, not since the 19th century has a recovery been so protracted – and it is based on unsustainable foundations. Rather than build a new economy based on investment and the industries of the future, Osborne made a strategic decision to commit to a failed model of debt. Abandoning the long-term economic health of the country for political gain (and indeed it was essential to getting the Tories through the May election) is contemptible. The longest fall in workers’ wages for generations has played a key role, of course; and as the Resolution Foundation has pointed out, unless Britain’s dire productivity levels increase, current increases in wages will stall. And then, to maintain flagging living standards, more Britons will turn to personal debt.

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If Labour has a New Year’s resolution, it should be to concentrate above all else on an economic alternative that resonates. How do we increase productivity? How do we encourage companies to invest? How do we nurture new industries in, say, hi-tech and renewable sectors? How do we shift the economy away from its dependence on a boom-and-bust finance sector? These are questions Osborne has failed to answer, and by doing so, he has placed the country’s economic future in grave danger. If there is a jump in interest rates or another global economic shock, our country is ill-prepared and badly exposed. And it is Osborne and his fellow ministers who are to blame.