Let’s take a few numbers:

Bank of England base rate: 0.5 per cent

Annual interest on the national debt: £49billion

Armed Forces spending: £35billion

Although interest rates are at the lowest point for 5,000 years http://uk.businessinsider.com/interest-rates-5000-year-history-2017-9 with a base rate of 0.5 per cent, we spend more each year on interest payments than on defence.

So-called austerity is nothing of the kind. Our debt increases each year by an astounding £73billion.

When the government talks about reducing the deficit, it is not talking about what most people think of as reducing debt, ie paying it off and decreasing the amount outstanding. Instead, this government is talking about reducing the ‘rate of the increase’.

If I have a mortgage of £500,000 and I am increasing it by £30,000 a year because I am overspending and cannot live within my means, in year 2, I owe £530,000 and in year 3, £560,000. If I increase my mortgage by £20,000 a year rather than £30,000 a year I am still living beyond my means and my debt is still growing. The government tells us that slowing the growth of our debt is a victory, as if it had reduced the debt! Can you imagine your mortgage lender putting up with this kind of plan?

National debt numbers are so big that most people cannot really understand them. Millions, people can relate to; billions, big numbers, but trillions? How many zeros is that? How many millions is that?

The national debt clock says the national debt is £2trillion and is increasing at £5,170 per second – so by the time you have finished reading this article, the national debt will have increased by £1million, or 40 nurses’ salaries.

TaxPayers’ Alliance research from 2015 suggests that the real debt is four to five times the figure which the Chancellor quoted in his Budget. They estimate that the real debt including pensions and unfunded liabilities is more than £9trillion. I calculate that to be a liability of £350,000 per British family.

Do families understand that their government has spent £350,000 of their children’s money? And on what? What do we have to show for it?

The real danger is interest rates – the subject no one wants to talk about.

Interest rates will rise. Already they are increasing a little and I believe that they will explode in the next few years because of the massive financial problems in Europe – and we will be caught by that contagion.

It is important to consider interest rates carefully. There is no single interest rate. There are hundreds of different interest rates and you can see this in your own lives. There is the awful rate that your high street bank pays on your savings, 0.1 per cent or so; there is the base rate of 0.5 per cent; there is your mortgage rate which will vary enormously per person from as low as 1.5 per cent to 7 per cent; there are bridging loan rates of about 10 per cent, overdraft bank rates of 14 per cent, credit card rates of 20 per cent-plus and worst of all, the interest rate charged to people who the lenders fear will not pay back the loan. The payday loan firms have had their interest rates ‘capped’ at 0.8 per day – or 292 per cent annually.

What if the government could not afford to pay the interest due? Can we be sure that the government will not default, like a borrower to whom you really do not want to lend your money?

At current rates of debt growth, the government will not be able to pay its debts in the long term and only pays back the capital it owes because some other mug is willing to lend the money instead. What happens when the next mug isn’t there?

The only interest rate the government actually controls is the base rate but this is not where it borrows most of its money. The government borrows most of its money in the bond market, currently paying about 1.5 per cent to borrow for ten years. But this rate is not set. It simply depends on the level at which investors are willing to lend. It can rise very sharply when a government is in trouble, as many administrations have learned.

I would caution – the base rate can stay unchanged – but gilt (bond) yields can scream up. During the Asian crisis in 1997, overnight interest rates for the Indonesian Rupiah went to more than 3 per cent a day – 1,000 per cent a year. Venezuelan bonds are now worth only 30 per cent of their initial value and even at a long-term yield of over 40 per cent, few want to lend to that government because they don’t think they will get their money back.

This is what happens when people lose confidence in their government’s ability to pay back. I am not suggesting at this point that the UK government is going to default, but I do think that people are going to demand much higher interest rates to invest in government bonds in the next few years. I believe this is inevitable, even without a Corbyn government. A Corbyn government would simply make the explosion happen more quickly, and he would end up with no lenders and interest rates swallowing all his revenues and much more besides.

Just think of the interest bill at three times gilt yields or 4.5 per cent, which is hardly high: £150billion. We will then be adding debt simply to pay interest on interest.

People have short memories. Interest rates in the UK were 16 per cent just 30 years ago. At that level, only ten times the current very low yield, we would be paying £450billion a year. Each year we would descend further into a crazy spiral until the world’s investors said ‘Enough!’ Bond markets https://en.wikipedia.org/wiki/Bond_market control government borrowing, not Mrs May or Mr Corbyn. The bond market is three times bigger than the stock market.

Margaret Thatcher famously said that ‘socialism works until you run out of other people’s money’. Jim Grant, an American interest rate commentator, has asked ‘Are government bonds a risk-free return, or a return-free risk?’

It’s not if, but when. I believe we are now past the point of no return. The coming explosion in interest rates will be much quicker than expected and much worse than we can ever imagine. God help our poor children. Not being able to afford a house will be the least of their problems.