It’s fair to say that we have all been witness to some economic magic that Penn & Teller would be proud of……all in front of our noses.
The average level of debt for graduating students this year in the UK is £53,400. Total student loans currently total £5 billion and will increase to £50 billion by 2030. The magic? The Government has essentially taken a public expense and turned it into a consumer debt and removed it from the Government balance sheet as a liability. Say what you want about the previous Labour Government, but this is genius. Pure and simple.
This passing of £50 billion of Government liabilities to consumer debts ‘magic’, will have consequences. The cost to repay this debt will impact on consumers being able to spend in the future on houses, cars, etc. as the first proportion of disposable income repays the Government ‘magic debt’.
Economic magic but with a long term consequence.
To put things into perspective, the average US student debt level is just $23,300 and they have some 2 million over 60 years olds still repaying!
What a mess.
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