The Chancellor's choices

Imagine if someone decides to give you £1000 with the expectation that they expect you to spend it over the next few months, mainly on consumer goods and services.

However, the catch is this. Sometime over the next five years, you will have to repay that debt and another £500.

So what are you going to do?

(a) Spend it all and worry about it later?
(b) Use it to pay off your existing debts which are at their highest levels ever?
(c) Invest the money to pay off the £500 you will owe later?

The answer to this question, more than anything else, should determine the fiscal strategy to be adopted by the Treasury on Monday.

Unfortunately, it may not be the answer the Chancellor wants to hear.

With personal debt out of control, rapidly rising unemployment on the way and the fact that the price of the average house falling, option (a) - which is critical to the Government’s proposed strategy - is probably not the one that the majority of the working population will choose at this time.

However, if you didn't have to pay back the £500 and the person giving you the money said that they would find that sum from their own internal savings, would your answer be different?

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