Experts warn insolvencies will continue to rise after a record number of people were declared insolvent during the second quarter of the year.
A total of 33,073 people in England and Wales became insolvent during the three months to the end of June, the highest level since records began in 1960 and 27 per cent more than during the same quarter of 2008, according to the Insolvency Service.
But insolvency practitioners warned that as many as 150,000 people could be declared insolvent during 2009, as the credit crunch prevents people from restructuring their debts, while rising unemployment makes it harder for people to keep up with their borrowings.
There was slightly better news on the corporate front, with a marked slowdown in the rate at which companies are going under.
Company liquidations in England and Wales remained broadly stable at 5,059 on a non-seasonally adjusted basis, and while this was close to a 16-year high, the annual pace of growth slowed to 37 per cent, down from 57 per cent in the previous quarter. There was also an easing in the rate at which companies are being placed into administration, with a 9.5 per cent rise in administrations to 1,027 during the quarter, well down on the 53 per cent year-on-year jump seen in the previous three months and the huge 251 per cent leap at the end of last year.
Rob Hunt, partner of PricewaterhouseCoopers in the Midlands, said: “Despite a slight seasonal dip, the overall number of companies going into insolvency remains high. However, within the numbers it is notable that whilst administrations have fallen compared to the previous quarter, Creditor Voluntary Liquidations, which normally result in the closure of a business, are continuing to increase.”
Mark Sands, director of personal insolvency at Tenon Recovery, said: “The overall record level of personal insolvencies, whilst at first shocking, hides the detail which suggests the worst is yet to come.” He said he expected 140,000 people to be declared insolvent this year, well up on the previous high of 107,000 in 2006.