Julian Knight: We could soon be experiencing our own Greek crisis

Our personal debt mountain is greater, and the UK could soon join the countries on the critical list

(LOUISA GOULIAMAKI / AFP )

Beware Greeks bearing gilts. So goes the attitude of the international markets towards the collapsing Greek economy.

The government may continue to issue paper but no one wants it, even at two-year rates of 16 per cent. So how does this affect you? Well, from a purely selfish point of view – and I am rather ashamed to write it like this considering the economic misery going on over there – but should Greece fall out of the euro, the drachma 2.0 will drop like an absolute stone. Think Black Wednesday and then some. It will be cheap as chips – or perhaps more appropriately, considering the package tours going there, egg and chips – to go to Greece again, which should at least ease some of the country's balance of trade problems. Provided, of course, we don't have our own currency crash in the summer of course – more of that below.

On one level, the failure of Greece shows the sheer impotence of EU institutions: the Germans will look after the Germans and the French will look after the French. A rescue should be put together to stop Greece from suffering the same fate as Argentina a few years back. But the impression that the EU is a ragtag body with no actual guts now has its confirmation; it's writ large across the trading screens in the banks and investment houses worldwide.

The markets know that the Portugals, Spains and Ireland are little challenge to be buffeted as much as they want. Just as long as they remember not to have a crack at the French and Germans they can have their sport – like jackals picking on the weak wildebeests running with the herd.

But what does all this talk of markets and EU economics mean to you? Well, let's get one thing straight: Greece's debt mountain may be huge but our total debts are actually worse. Why? Unlike us, the Greek population isn't loaded down with credit card debts, personal loans, mortgages, remortgages, consolidation loans and individual voluntary arrangements to the tune of £1.4 trillion. If you add personal debt to the national government debt then our debt-to-GDP ratio soars from about 60-70 per cent to about 200 per cent.

In other words, it reaches as high as at the end of the Second World War when we had been battling for our very lives and national survival rather than buying flat-screen televisions.

What is going on in Greece matters because we too are very vulnerable. In fact, instead of the much talked about Pigs (Portugal, Ireland, Greece and Spain), you could have the even uglier Pugs: simply replace Ireland (which is sorting out its mess) with the UK. A Greek-style implosion of the UK's credit rating wouldn't just hit the Government and the employment of those in public sector. It could also create a domestic credit squeeze in the UK as a burst of inflation and the necessary higher interest rates spook the lenders as never before.

It's a horrible scenario and I hope that it won't come to pass. But what is happening in Greece could occur here – not so much because of the previous government's largesse with borrowed money but because of our own collective lack of personal control when it comes to debt. Fortunately, the UK's massive personal debt mountain doesn't as yet figure majorly in the minds of the money markets. But should the Pigs fall one by one out of the euro, it could become another factor in the negative column for the UK economy. So in all this talk of tackling the government deficit, maybe you ought to consider your own – and fast.

Forget means tests for elderly

As stated not just by the Institute for Fiscal Studies but also by this section last Sunday, none of the parties want to tell you the truth over tax and spend.

The cuts will come and they will be, as promised by nice Mr Clegg in his own party conference, "'savage". But one appeal to whoever wins the election: when benefits for the elderly such as free bus travel, winter fuel allowance and free TV licences are pared back, don't make people claim them. When it comes to the elderly going through the means test results only in the poorest and most vulnerable failing to claim what they are entitled to. Instead, just bar higher rate tax payers from getting the benefits if you need to save a little money.

As 13 years of Labour government come to an end – after the cataclysm of Gordon Brown's tenure and the betrayal of Iraq – one of the most positive testaments is that a million-plus pensioners were lifted out of poverty in the decade from 1997. In the difficult times to come and regardless of whether it's Tory or Lib-Labs in charge, we don't want to see the elderly unable to afford to heat and feed themselves again.