The PM was due to say:
“The only way out of a debt crisis is to deal with your debts. That means households – all of us – paying off the credit card and store card bills. It means banks getting their books in order.”
But he will now say:
“That’s why households are paying down their credit card and store card bills.”
Yet this revision creates a new problem for Cameron. If families are paying off their credit cards why is household debt forecast to rise from £1.6 trillion in 2011 to £2.1 trillion in 2015? The OBR’s growth figures are based on the assumption that private debt will rise as the national debt falls (from 70.9 per cent of GDP in 2013-14 to 69.1 per cent in 2015-16).
And, politically speaking, the damage may be done. Ed Ball’s statement that people don’t need an “out of touch Prime Minister” lecturing them about paying off their credit cards will have resonated with many. This was political gold for Labour. How, some Tories will ask, did Cameron get it so wrong?