Japan has survived with enormous sovereign debt for a decade. But Britain lacks Japan’s culture of patriotic loyalty.

Rising debt becomes a mountain nobody can climb more easily than most people realise.

Everyone keeps telling me how, in a global context, the UK’s national debt is nothing to worry about. However, the fact remains that in 2008, it stood at 7.1% – whereas this year it is expected to be 59.9% at best. That’s a pretty inflationary change in the wrong direction: we appear to be heading for Greek levels of hock unless drastic action is taken – and quickly.

Like Greece, Japan’s national debt is around 120% of GDP. The deficit continues to climb every year. The country’s credit rating keeps being cut – it left AAA behind years ago. Debt management costs are a fifth of Japanese annual spending. As I keep on saying, this is how the maths of debt work: one minute it’s a lot, and then you turn around and it’s a lot more than anyone could ever repay.

“Gradually the Japanese government debt is closing in on the level of savings of the Japanese people,” says Shigeru Ishiba, Chairman of the country’s policy council. “Once the government debt goes beyond the level of total savings, we will see the destruction of Japan. That day may not be that far away.”

Dire warnings about the Japanese situation have been around for the last ten years. The country has been able to defy predictions because 95% of those buying government bonds are Japanese. As Gillian Tett of the FT remarks, “This is part of the Japanese culture of loyalty. It wouldn’t happen in Europe”.

Specifically, it wouldn’t happen in the UK. If we carry on down the same road as the Japanese, we will run out of investors in government debt long before the Japanese.

As it happens, private savings have shot up in the UK over the last year. But there are two problems with this. First, the UK economy (like almost all those in the West) cannot function properly without high debt and low savings ratios. And second, too much QE and inflation will destroy the real value of those savings. Then we do will be in the Japanese boat, wondering what to do next.

We will be in esteemed company. The US faces a similar problem; but the difference there is that the Americans have massive natural resources, and we don’t.

The moan repeated over and over by the economists supporting the Government is that drastic expenditure cuts will shove the country back into recession. But these thinkers don’t seem able to accept the reality which goes with their analysis: that the private sector simply isn’t anywhere near strong enough to respond without more QE. And if that is the case, all the maintenance of Government spend will do is delay the pain….and make our ultimate bankruptcy even more spectacular.

The bottom line is that our economic output is massively overdependent on financial services,manufacturing is weak, and far too many people are employed by the Government – doing jobs that produce nothing. Nobody can escape that fact. It must be faced, or the consequences will be too awful to contemplate. Better to have deep pain now and survive than to suffer less pain – and then live with the disgrace of our country being run by a group of international administrators.

Forty years of good living and safety-nets have convinced too many Brits that nothing bad can ever happen. They are so, so wrong.