Melanie McDonagh: It's time to blow the cobwebs off the money box

There are times when the personal really is political, when the politics of nations seem to be replicated by what's happening in our own lives. Last week, Lord Wolfson, chairman of Next, warned his fellow British retailers that over the next few years they'll feel as if they're walking up the down escalator.

The "new normal" is no longer ever greater growth: shoppers don't have the money. Lord Wolfson and his folks have worked out that consumers had £21bn less to spend in the year to January, because of rising prices: £10bn went on higher transport costs, £7bn on more expensive food and drink; £4bn on rising housing costs. If you think the pound in your pocket is worth less than it used to, you're right.

There was a dispiriting congruity, in fact, between the squeeze on individuals and the way improvident nation states were put through the wringer last week. First down was Portugal, where the parliament simply refused to implement the socialist government's austerity measures. Silly them; the markets hardly blinked before they raised the price of Portugal's debt. Next to go was Spain, where another socialist government has promised laws to oblige itself to reduce the country's debt. It hasn't done anything at all to stop the speculation that Spain's next for an IMF bailout. It's not looking good for Ireland either, whose new government came to office on the promise that it would insist that the terms of its own bailout should be improved. After going a little berserk on the back of European Bank interest rates that were bargain-basement low because they were designed for Germany, Ireland is living through the hangover after the spree.

In fact, we have a collective hangover – individual, institutional, national and international – from the explosion of credit that characterised the entire decade before 2008, and began during the Thatcher era, when saving to spend seemed as quaint as waiting for marriage before having sex. The idea that you should buy something only when you could afford it was from a different world.

My mother lived in that world; she was one of the generation who'd put ten shillings (50p) down every payday if she wanted to buy, say, a coat; the shop kept the coat for her until she'd paid it off. In a second-hand shop in Norfolk the other day, I bought something called a thrift box for a couple of quid; it was a long money box subdivided into sections called Gas, Rent, Electricity et al, so you wouldn't be caught unawares when bills came in. It was like an archaelogical relic of a vanished culture.

Only one consumer in five, apparently, thinks this is a good time to contemplate making a major household purchase. The levels of personal debt in Britain are as grisly as ever: in January, the total was £1,452bn. Total lending in January rose by £1.5bn but in one area, consumer credit, the level actually decreased by £0.3bn, partly because credit card companies are charging more than 20 per cent APR while base rates bump along at less than 1 per cent. Their rationale, that more people are defaulting, rather ignores the process of cause and effect. Meanwhile, Nationwide's "consumer confidence index" showed its lowest reading in February since it was invented, seven years ago.

You've heard this before, but we are, governments and people, in this together. And not in a nice way.