Bankruptcies down, but worries persist for 2011

A record number of people were declared insolvent in 2010, although the trend is down and corporate failures are also charting a more optimistic course. However, the prospects of higher unemployment and a rise in interest rates this year threaten to reverse those movements, experts say.

Some 135,089 individuals were declared bust last year, the Insolvency Service reported yesterday, up 0.7 per cent from 134,142 in 2009.

A smaller than expected rise in joblessness and forbearance by lenders and the tax authorities may have helped to limit the increase. In the last three months of 2010, the number of individual insolvencies was down 9.4 per cent on the period from July to September.

The number of individual insolvencies in the fourth quarter was the lowest since the first quarter of 2009 and was down from 33,935 in the third quarter of 2010 and a record high of 35,682 in the first quarter of 2010.

Howard Archer, the chief economist at Global Insight said: "The reality is that many people remain at risk, particularly if economic activity is muted and unemployment moves higher in 2011 as tighter fiscal policy increasingly bites.

"The substantial fiscal squeeze will increasingly hit public sector jobs and consumers' pockets, while households already face high unemployment, negative real wage growth and elevated debt levels. There will also be a lagged impact from the recession as likely relatively muted growth in 2011 will mean that many people who have lost their jobs will be unemployed for a long time".

Other observers have also spotted worrying underlying trends, especially on people entering the early stages of difficulty, before insolvency is declared. Chris Nutting, director of personal insolvency at KPMG, said: "While the headline figures from the Insolvency Service show that bankruptcy numbers are falling, there is still an increase in the overall number of people entering into a formal personal insolvency procedure.

"Our research shows that creditors are losing a staggering £20m a day from insolvencies. These losses are bound to affect new lending decisions and the cost of new credit."

Mr Nutting continued: "As the underlying problem continues to grow it is a shame that the recent cuts in public expenditure have affected such areas as free debt advice. This will undoubtedly increase the number of consumers who choose the wrong solution to their financial problems."

Bodies such as the Citizens Advice Bureau and Shelter have warned ministers that cuts to their funding and to the legal aid budget will put the services they provide to the most vulnerable in society at risk.

Company liquidations in England and Wales were also down on the quarter, but by less than for individuals – a fall of 0.2 per cent to 3,955. This took the number of company liquidations down to the lowest level since the spring of 2008. Overall company liquidations amounted to 16,045 in 2010, which was down 15.9 per cent from the record 19,077 in 2009.

The Bank of England's Monetary Policy Committee meets next week to discuss the next move on interest rates. While the general expectation is for no change, there is also a widespread assumption that rates will be higher by the end of the year, with obvious implications for heavily indebted households.

Insolvency in numbers

135,089 individuals declared bust last year by the Insolvency Service



£20m The amount creditors lose each day because of insolvencies, according to KPMG research



16,045 The number ofcompanies that went into liquidation last year

News
people

Actress sees off speculation about her appearance in an amazing way

Arts and Entertainment
Serge Pizzorno of Kasabian and Noel Fielding backstage at the Teenage Cancer Trust concerts
musicKasabian and Noel Fielding attack 'boring' musicians
News
videoWatch Lynda Bellingham's tragic final Loose Women appearance
Arts and Entertainment
The last great picture - Winner 'Black and White' and overall 'Wildlife Photographer of the Year'
art
PROMOTED VIDEO
News
people

News
i100
Arts and Entertainment
High notes, flat performance: Jake Bugg
music

Review: Despite an uphill climb to see Jake Bugg in action, his performance is notably flat

News
The Putin automaton will go on sale next month in Germany
videoMusical Putin toy showing him annexing Crimea could sell for millions
News
news

Powerful images of strays taken moments before being put down

News
i100
Arts and Entertainment
S Club 7 pose for Children in Need 2001
music
News
ebooksAn unforgettable anthology of contemporary reportage
Arts and Entertainment
'Right Here' singer Jess Glynne is nominated for Best Newcomer at the MOBO Awards 2014
musicExclusive: Jess Glynne hits out at 'ridiculous' criticism of white artists nominated for Mobo Awards
Voices
'Irritatingly Disneyfied': fashion vlogger Zoella
voices

Arts and Entertainment
Russell Brand has written a book of political analysis called Revolution
books

Review: Witty banalities aside, the comedian has an authentic voice

Arts and Entertainment
Separated at birth? Frank Sivero (left) claims The Simpsons based Mafia character Louie on his Goodfellas character
arts + entsFrank Sivero sues Simpsons studio over allegedly basing mobster character on Frank Carbone
News
Carl Bernstein (left) and Bob Woodward (right) with former 'Washington Post' executive editor Ben Bradlee
people

The Washington Post editor helped Bob Woodward and Carl Bernstein bring down President Nixon

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...

Trainee Recruitment Consultant Birmingham

£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...

Trainee Recruitment Consultants

£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...

Helpdesk Analyst

£23000 per annum + pension and 22 days holiday: Ashdown Group: An established ...

Day In a Page

Indiana serial killer? Man arrested for murdering teenage prostitute confesses to six other murders - and police fear there could be many more

A new American serial killer?

Police fear man arrested for murder of teen prostitute could be responsible for killing spree dating back 20 years
Sweetie, the fake 10-year-old girl designed to catch online predators, claims her first scalp

Sting to trap paedophiles may not carry weight in UK courts

Computer image of ‘Sweetie’ represented entrapment, experts say
Fukushima nuclear crisis: Evacuees still stuck in cramped emergency housing three years on - and may never return home

Return to Fukushima – a land they will never call home again

Evacuees still stuck in cramped emergency housing three years on from nuclear disaster
Wildlife Photographer of the Year: Intimate image of resting lions claims top prize

Wildlife Photographer of the Year

Intimate image of resting lions claims top prize
Online petitions: Sign here to change the world

Want to change the world? Just sign here

The proliferation of online petitions allows us to register our protests at the touch of a button. But do they change anything?
Ed Sheeran hits back after being labelled too boring to headline festivals

'You need me, I don’t need you'

Ed Sheeran hits back after being labelled too boring to headline festivals
How to Get Away with Murder: Shonda Rhimes reinvents the legal drama

How to Get Away with Murder

Shonda Rhimes reinvents the legal drama
A cup of tea is every worker's right

Hard to swallow

Three hospitals in Leicester have banned their staff from drinking tea and coffee in public areas. Christopher Hirst explains why he thinks that a cuppa is every worker's right
Which animals are nearly extinct?

Which animals are nearly extinct?

Conservationists in Kenya are in mourning after the death of a white northern rhino, which has left the species with a single male. These are the other species on the brink
12 best children's shoes

Perfect for leaf-kicking: 12 best children's shoes

Find footwear perfect to keep kids' feet protected this autumn
Anderlecht vs Arsenal: Gunners' ray of light Aaron Ramsey shines again

Arsenal’s ray of light ready to shine again

Aaron Ramsey’s injury record has prompted a club investigation. For now, the midfielder is just happy to be fit to face Anderlecht in the Champions League
Comment: David Moyes' show of sensitivity thrown back in his face by former Manchester United manager Sir Alex Ferguson

Moyes’ show of sensitivity thrown back in his face... by Ferguson

Manchester United legend tramples on successor who resisted criticising his inheritance
Two super-sized ships have cruised into British waters, but how big can these behemoths get?

Super-sized ships: How big can they get?

Two of the largest vessels in the world cruised into UK waters last week
British doctors on brink of 'cure' for paralysis with spinal cord treatment

British doctors on brink of cure for paralysis

Sufferers can now be offered the possibility of cure thanks to a revolutionary implant of regenerative cells
Ranked seventh in world’s best tourist cities - not London, or Edinburgh, but Salisbury

Lonely Planet’s Best in Travel 2015

UK city beats Vienna, Paris and New York to be ranked seventh in world’s best tourist destinations - but it's not London