IN RECENT weeks there has been lots of talk about how much consumer debt Britons are swimming in. Back in August the former chair of the Financial Services Authority, Adair Turner, said in an interesting documentary on Radio 4 that personal debt in Britain was a big problem. Just today the British Chambers of Commerce has warned about economic growth in 2016, saying that the economy “cannot rely so heavily on consumer spending to fuel our economy, especially when driven by increased borrowing”. With all this, it is worth bearing one thing in mind. News reports tend to focus heavily on reporting figures in absolute amounts (ie, in pounds) because it sounds scary. ("Britain is sitting on a £173 billion time bomb", etc.) The problem here is that as the economy expands, and as prices rise with inflation, the absolute figure is bound to keep going up.

What really matters is the stock of debt relative to the incomes of the people servicing it. And when you look at consumer debt relative to Britons’ incomes (see chart) things don’t look anywhere near as bad. The chart's figures are taken from the Bank of England and the Office for National Statistics. As you can see, following the recession the stock of debt has fallen. And with further increases in real household incomes next year, that trend may continue.