I’ve been doing some calculations and I think I’ve come up with a way to end the recession in the UK, make us all feel incredibly well-off, stimulate spending and rejuvenate the housing market all in one go.
Actually, it’s not my original idea – I heard it as a throwaway remark on the radio – but it stayed with me and I’ve given it a bit of thought.
So here it is: why doesn’t the Government pay off everybody’s mortgage? It would eliminate one of the key areas of concern for banks and instantly restore their balance sheets, and in a stroke transform the country’s economy.
I’ve even costed it out. There are 9m mortgages in the UK, and the average value of that mortgage, according to research by mortgages.co.uk, is £138,000 (or thereabouts).
To pay off those debts would cost the Government £1,242,000,000,000, which I think is £1.2trillion. It’s a huge figure, of course, but comparable in scale to the recent £500bn bailout in the USA, which may or may not work.
Of course, it’s not going to happen – not least because the 12m homeowners who have diligently paid off their mortgages would be in uproar – but it does show you how big Government money can make a big difference.