Just nine per cent of respondents realise that the government plans to borrow roughly an extra £350bn from this financial year to 2014-15, according to a ComRes/Institute of Economic Affairs (IEA) poll.
Incredibly, seven out of 10 people actually believe the government is cutting £350bn from the debt over the course of the parliament, despite an annual deficit that is still set to total more than £100bn this year. One fifth (21 per cent) wrongly believe there will be no change in the national debt.
Government debts will surpass £1.3 trillion by 2014-15, according to official forecasts produced by the Office for Budget Responsibility (OBR) – equivalent to over 70 per cent of the country’s GDP. “It’s staggering and worrying that 70 per cent of people completely misunderstand the dire situation the country faces,” said IEA chief executive Mark Littlewood, throwing his weight behind City A.M.’s financial literacy campaign.
This paper has argued for greater standards of financial literacy to enable people to get a better grip of their own finances – and understand the problems facing the government, as well as the financial sector.