‘Household economics’ is a term I’ve heard used a few times recently in the debate over government debt and public spending. It’s usually used by those who argue that government debt isn’t as big a deal as some are making it out to beand that the rules that apply to governments are different from those that apply to households. Household economics might focus on paying off debt as early as possible but governments don’t need to do that – or so the argument goes.
In this context, the use of the word ‘household’ is, presumably, meant to imply prudence and sound money management.
Looking at the UK figures, though, I’m not sure that our households stack up that well. The government’s debt of £796.9 billion is around 160% of its £496 billion annual revenue. That doesn’t look too bad when compared to the 170% debt to income ratio of the average British household.
It might be fun to have a go at the government for its wild spending but it’s really no worse than the rest of us.