It was the worst quarter for personal insolvencies since the 1980s, said Mark Sands, of KPMG professional services. The figure at the height of the early 1990s recession was 38,792 for the whole of 1992. Consumer debt is still at record levels and people are being hit by the recession which is pushing up unemployment and repossessions,” said Mr Sands. He predicts 150,000 personal insolvencies this year.
Pat Boyden, of PwC business recovery services, said he expected the number to increase to between 130,000 and 150,000 this year partly because of the introduction of debt relief orders, a new form of bankruptcy for people with debts of less than £15,000.
“We are now seeing a lot of self-employed people and entrepreneurs and buy-to-let landlords getting into difficulty,” Mr Boyden said. “What may be interesting is that in the 1990s recession, bankruptcies continued to increase for nearly three years after the worst of the recession had passed.
“If that is the case this time, we may be seeing record figures every quarter until 2012,” he added. The rise in bad debts will push up impairment provisions at embattled banks as people default on credit cards, loans and mortgages.
Company failures also rose sharply in the first quarter of the year. Insolvency Service figures show that 4,941 companies went into compulsory liquidation or creditors’ voluntary liquidations.
This is a jump of 56 per cent from the same period in 2008 and a 7.1 per cent rise on the last quarter of 2008.
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