CSR - converting cheap public debt into expensive private debt?

I've been thinking about the debt transfer that cuts in public spending will produce.

Those whose income is reduced by the cuts - for example public sector workers made redundant, unemployed people whose benefits are cut, businesses who supply the public sector, or higher rate tax payers whose child benefit is removed - will surely increase their own indebtedness, at least in the short term.

If they do this by borrowing at high rates of interest (through credit cards, loan companies, loan sharks, increasing their mortages, say) then the CSR transfers debt burden from (cheap) Government borrowing to (more expensive) personal borrowing.

Obviously (?) there isn't a one-to-one match between the reduction in Government debt and the consequent increase in private debt: I guess the latter might be larger than the former.

But given the disparity between the interest rates on the two kinds of debt what will be the net effect of the CSR on the total servicing costs of public and private debt?

Comments

[Kevin Donovan]

Excellent point - and one which could be generalised/otherwise exemplified. Just one (because it's one bee in my bonnet hive): the closure of Becta saves £x pa but the cost of everything it did is thrown inefficiently upon the budgets of individual teachers, schools and colleges. I don't think any of this has to do with savings (alleged or otherwise) or efficiencies. It's good old fashioned dogma from what I can only see as the revived Bourbons and their Liberal fags (in a good old public school sense of the word, of course).