Analysis: For a minority borrowing is becoming a problem, writes Marc Coleman, Economics Editor

Homer Simpson is alive and borrowing. You know the old story. You finally tackle that unsightly lump in your living room carpet. You gaze around at your carpet's new soccer-pitch smoothness. And then it appears. At the other end of the room cocking a snoop at you is the same old lump, migrated to another place of residence.

The last 20 years have seen the government reduce our public debt from basket case levels of almost 120 per cent of Gross Domestic Product (GDP) in 1987 to our present level of around 30 per cent of GDP (the value of goods and services produced by the economy).

By contrast private sector indebtedness rose from 71 per cent of GDP in 1995 to a level of 123 per cent in the first half of 2004. Since then the continued strength of private lending has pushed this level even higher.

So as our public indebtedness "lump" disappeared, an equivalent lump has popped up in the private sector.

Today the Central Bank will publish its Annual Report and will issue its umpteenth warning about private sector credit growth. This time, though, it has some additional back-up for the warning.

The Irish International Bank and the Economic and Social Research Institute yesterday published a joint study entitled Consumers and debt; Are they worried? Should we be?

The study shows that a higher proportion of us hold non-mortgage debt compared with 2004 (36 per cent now as against 33 per cent then).

Amongst those, the average debt level has risen from €5,100 to €5,800. According to IIB economist Austin Hughes, this increase in debt is comfortable for most of us and reflects increased confidence about the future.

But he has also warned that for a minority of us, borrowing is becoming a problem. This is especially the case for those whose income growth is not matching growth in lifestyle expectations.

The study reveals that 19 per cent of us regard our borrowing levels as "heavy" and provides a worrying insight into the social aspect of borrowing. The survey shows that those in the €20,000 to €25,999 income bracket are more than twice as likely to regard their debt burden as "heavy". The survey also examines debt levels according to age and finds that almost half of those in the 40 to 49 age bracket feel the same.

And it is where the study examines the reasons for borrowing growth that yet more interesting information becomes evident. Some 41 per cent of non-mortgage debt is being undertaken for the purposes of "accumulating assets", 59 per cent is being undertaken for the purposes of financing my lifestyle".

So while most of us are confident about our increased borrowing, we seem to be witnessing the emergence of a "Homer Simpson" type of borrower; a middle-aged and low income earner struggling in vain to keep up with the Jones.

The strong growth in personal debt is no longer just an issue of overall financial stability, but a matter of social concern as well.