The number of people declared bankrupt hit an all-time high in the first months of the year. The Department of Trade and Industry said yesterday there were 10,091 bankruptcies in the three months to March, the first time the quarterly total has breached 10,000.
It was a 24.5 per cent jump on the same period a year ago and a 2.8 per cent increase on the previous quarter. A further 3,139 took advantage of a new lenient voluntary scheme, a 40 per cent annual rise.
Economists said the figures were the latest sign that rising interest rates, record debt levels and surging oil prices were putting households under pressure.
Howard Archer, the UK economist at the consultants Global Insight, said a number of people had borrowed up to their limit and were vulnerable to even modest rises in interest rates. "This is a situation that the Bank of England will be very conscious of in its future monetary policy decisions, and is another reason for it to hold off from raising rates again in the near future," he said.
Steve Treharne, the head of personal insolvency at the accountants KPMG, said the figures had come just a week after news of a 35 per cent increase in mortgage possession actions on the same period last year. "There is a big black cloud of debt hanging over the UK," he said. "If the current trend continues, we could see annual rates of 60,000 bankruptcies within the next three years."
Only about one-third of those declared bankrupt were unemployed, the DTI figures showed. Vicky Redwood, an economist at the consultants Capital Economics, said: "Even those with a regular income are running into financial difficulties. The slowdown in household spending growth is here to stay."
But analysts said there was a glimmer of hope in the figures, which showed a declining trend in insolvencies and little sign of an imminent crash in house prices.
The quarter-on-quarter rise in failures has fallen to just 1.6 per cent from a peak of 8.8 per cent last year, indicating the nine-month pause in interest rate rises since last August had eased the pressure. Michael Saunders, the senior European economist at Citigroup, said: "Overall household balance sheets and cash flow are not under great strain."Reuse content