PRIVATE DEBT

There is a flip side to Denmark's having the world's highest tax take and welfare state. It also has the world's largest private debt (gross debt as a percentage of disposable income). In 2010 this was over 300%, compared with 200% for Norway, just over 150% for Britain, and under 100% for Germany, France and Italy. In supposed profligates such as Spain and Portugal, it was under 150%; in Greece it was well under 100%.

Part of this is simply the mechanics of fractions. A high tax take automatically reduces disposable income, the denominator; so for any given debt, the numerator, Denmark's ratio will automatically be bigger. The numbers may well also have changed since 2010, in Greece for instance.

Nevertheless, this highlights an important point. It is not the level of public debt alone that matters in an economy, but the overall level of debt, both public and private. One reason why Italy can service the world's third biggest public debt is that private debt is correspondingly low. Something to remember when Danish politicians go on about how responsible they are. They are responsible because they have to be; Danish consumers are not.

Walter Blotscher