Borrowing takes toll as bankruptcies soar
Over 9,000 people went bankrupt in England and Wales during the third quarter of this year – that’s the highest level of insolvencies in a decade, according to the latest figures from the Dti.
The figure represents an increase of 4.1% on the previous quarter and of 16.9% on the same period a year ago. That’s raised concerns that the increasing levels of consumer debt – which show little sign of abating – are taking their toll on individuals.
The MPC’s decision to increase the base rate from 3.5% to 3.75% yesterday could help to put a dampener on personal borrowing, but there are also fears that further rate increases could result in many homeowners being unable to meet mortgage repayments after overstretching themselves during the recent housing boom.
The news for the business sector is more positive, however, with just under 4,000 company insolvencies taking place between July and September this year.
That’s a decrease of 11.2% on the previous quarter, and of 12.5% on the same period in 2002.
Only 1.0% of active companies became insolvent in the twelve months ending in September 2003. And the situation is likely to get better for businesses following the introduction of the Enterprise Act in September, which puts the focus on helping struggling companies, rather than on giving rights to creditors.
