The issue of debt
Perhaps the most fundamental economic concern of the past decade or so has been debt. Personal, corporate and sovereign – debt was the weight that plunged the world into a global recession six years ago. And it remains as fundamental to the global narrative today as it did in 2008.
The issue to hand is that the debt hasn’t really gone away. It’s a tricky topic, with differing views as to what constitutes ‘debt’ – e.g. do you include pension liabilities? But looking at the UK as an example, debt seems to be rising. According to the ONS, general government gross debt increased by £100.1 billion between the end of Q1 2013 and the end of Q1 2014 (to £1.487 trillion). As a proportion of GDP, gross debt increased from 88.6% at the end of Q1 2013 to 91.1% at the end of Q1 2014.
According to a BBC article posted at the end of last year based on figures from the Bank of England, “household debt in the UK has reached a record level. Individuals now owe a total of £1.43 trillion, including mortgage debt, slightly above the previous high… The previous record was set in September 2008, just before the effects of the financial crisis and the recession began to bite.”
The ongoing focus on debt and debt reduction in countries such as Italy, France, the US and Japan – as well as the UK – is a key issue for the global economy. Japan’s national debt exceeded 1,000 trillion yen (1 quadrillion) in 2013. In terms of the US, a highly interesting website is http://www.usdebtclock.org. It will be interesting to see how the global ‘debt’ issue is managed, and whether it becomes a primary political focus again soon.