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Bell Pottinger North - Client News
Friday, August 04, 2006
DEBT CRISIS FUELLED BY UNEMPLOYMENT HIGH

BT 45 06
4 August 2006

Unemployment, the scourge that once plagued Thatcher's Britain, is fuelling the rise in debt levels, as personal insolvencies hit another record high.

Joanne Wright, partner at corporate rescue and insolvency specialists Begbies Traynor, says that the latest figures, which show that personal insolvencies are up by 10 per cent on the last year, are no surprise. She believes the depressed labour market and emergent skills gap is causing the increase in debt misery for thousands across the UK.

Figures released by the Department of Trade and Industry this morning show the number of personal insolvencies reached 26,021 in the second quarter of 2006 an increase of 10 per cent on the previous quarter and an increase of 66.3 per cent.

This was made up of 14,915 bankruptcies, a decrease of 3.3 per cent on the previous quarter and an increase of 32.5 per cent on the corresponding quarter of the previous year, and 11,105 IVA's, an increase of 34.9 per cent on the previous quarter and an increase of 153.2 per cent on the corresponding quarter of the previous year.

UK unemployment, hit a six-year high in May 2006, as the number of people finding jobs failed to keep pace with the expansion of the workforce. The figures rose by 90,000 in the three months to May compared with the previous quarter. The claimant count, which measures the number of people out of work and claiming benefit, increased by 5,900 in June compared with May, giving a total of 956,600 claimants for the first half of 2006.

Wright comments: "What we are seeing now, more than ever, is a society of 'haves and have nots'. There has been an unprecedented increase in the amounts of "extreme" debt, people owing over £100,000, this year. Unemployment is pushing people into bankruptcy or IVAs and there is a wider cost to society, if creditors receive nothing, it stands to reason that someone has to pay, lenders will simply pass on the cost to other customers.

"We have seen a rise in the number of clients who have been made redundant. The redundancy package may not have been what they were expecting, and finding a new job took longer than anticipated. It can be difficult to change their lifestyle, to take into account the loss of a wage, and spending habits can remain the same as when they were employed, which, in turn, leads them to max out their credit cards, leaving them unable to meet their mortgage repayments.

"This new quarter's statistics shows no signs of abatement and no respite for the thousands of people literally drowning in a sea of debt."

Ends

Press contact:
Joanne Fletcher-Wall
Bell Pottinger North
01625 506425

Information on Begbies Traynor can be accessed via the Group's website at:
http://www.begbies-traynor.com

Notes to editors:

About Begbies Traynor Group plc

The Group specializes in business insolvency management and is becoming increasingly active in the area of personal insolvency. It also offers services in corporate rescue and investigation services and has entered the field of corporate finance.

In November 2005, the Group entered the rapidly-expanding volume personal insolvency market via the acquisition of W3 Debt Solutions, a firm specializing in providing advice and practical support to individuals in debt.

The Group has grown to its current network of 32 nationwide offices ranging from Scotland to the South West of England, with 350 operatives. The Company continues to pursue its strategy of organic development, coupled with the acquisition of specialist knowledge of both individuals and firms, to further increase its market share in its core services.

The Directors believe that the Group is the UK's largest independent insolvency, corporate rescue and recovery specialist with clients ranging from major institutions to individuals with business difficulties.

The Office Network

The Group operates with 60 licensed insolvency appointment takers, some 225 fee earning staff and 65 in support and administration. The Group operates from 32 locations across the UK.

Business Activities

The core business of the Group is the formal administration of insolvencies including receiverships, liquidations, administrations, company voluntary arrangements and business-related personal insolvencies. The Group has extended its activities into a range of consultancy services including corporate rescue, credit management, forensic and investigation services and corporate finance.

 

This feed contains news releases issued by the clients of Bell Pottinger North

www.bellpottingernorth.co.uk





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