Personal Insolvency Drops in Second Quarter
Personal insolvencies in England and Wales have finally shown some positive results, seeing their first drop for three years. However, some are sceptical as to whether the number of people in financial difficulty is actually dropping or more people are simply ignoring their problems.
According to new figures, there were 34,743 cases of formal insolvency in England and Wales from April to June, 3% less than in the first quarter of this year. Corporate insolvency was also down to 1,311, decreasing 2% from the last quarter and a massive 14% compared the same period last year.
They now appear to be in a gentle decline as the economy recovers from recession.
"This is a welcome trend in the number of business failures, but the UK economy is not out of the woods yet," said Malcolm Shierson at accountants Grant Thornton.
"We expect to see an increase in business failures in outsourcing, as well as the hotel and leisure services sectors," he added.
The personal insolvency comes as a welcome relief after constantly rising for the past 3 years. The final quarter of 2007 saw 23,830 insolvencies compared with a huge 35,682 from January to March this year.
"It's encouraging to see that bankruptcies are down, but don't be misled by this," said Brian Johnson at accountants HW Fisher.
"The fact that both debt relief orders (DROs) and individual voluntary arrangements (IVAs) are still creeping up shows that we are not in the clear yet.
"Many consumers are still highly stretched financially and public sector spending cuts are only going to make things worse over the course of the next two years," he added.
Paul Crayston of the Money Advice Trust pointed out that personal insolvency was still running at a level far higher than a decade a ago.
"The number of insolvencies in the first half of the year 2000 was 15,369, whereas the first half of this year saw 70,425 insolvencies - an increase of more than 458% over the last 10 years."
Posted at 04:32PM Aug 06, 2010 by Marc Stenton in Insolvency | Comments[0]
