Britain's Private Sector : Net Creditors!

On this side of the Channel, we're so used to international comparisons finding we're the most feckless, drunken, ineducable, absent-mindedly pregnant slobs that we sort of assume we must also be the most financially irresponsible deadbeats too. Particularly when compared to our clean-living near-neighbours, who we view as Germanically cautious like Mrs Merkel, or Catholicly-financially-repressed like all those Italians who are still living with their mothers past the age of 40. No wonder they can save, if they're still lapping up Mama's pasta.

It was also the message we got when Mr Soros bounced sterling out of the ERM back in 1992: 'You can't come in here dressed like that, sonny.'

Like many caricatures there's a painful element of truth. Back in the mid-2000s, the UK private sector was in net debt to its banks to the tune of around Eu350 billion, whilst the Eurozone's private sector owed a net  Eu 900 billion or thereabouts.  In other words, the Brits owed a net Eu 5,720 per head of population, which was more than double the Eurozone's Eu2,735 per capita net debt. Feckless or what?

But the mid-2000s isn't where the story stops. By the later 2000s, even the Brits got a bit worried about carrying so much debt, so even at the peak of late-2007, the net debt per capita had expanded to only Eu 6,854. But over the Channel, the party really started only in 2005, and by 2007, the Eurozone per capita net private bank debt had risen to Eu 4,475. Catching up!

And then, when the crisis hit, the Brits reacted hard and fast, repaying an astonishing net Eu 540 billion between October 2007 and March 2011. And now? The latest figures (for March 2011) show we're now in credit to the tune of Eu 116 billion, or Eu 1,880 per head.  By contrast, across the Channel, our Eurozone counterparts, though they have repaid Eu 815 billion since their peak net-debt of September 08, still find themselves net debtors to their banks of approximately Eu 1,643 per head.

And as a corollary, the British bank loan /deposit ratio has fallen to around 95% (from a 2005 peak of 121% - what was the FSA thinking of?), whilst the Eurozone LDR is still  running around 105% (dribbling down from a 2006 peak of 117%).

None of which is to imply that we Brits aren't the slack-jawed morons you can find sicking-up on the streets of Manchester/Newcastle/Cardiff on any night of the week.   It's just that, rather surprisingly, it turns out we can afford it.  So I'm off for a martini.