Figures from the Insolvency Service have shown that total personal insolvencies have fallen dramatically this year. The total insolvencies were down by almost a third compared to 2014, whilst in the past three months they have reduced by 9.1%. In fact, personal insolvencies and the number of individuals being declared insolvent have fallen to their lowest level for almost 10 years.
The Insolvency Service quoted that 18,866 individuals became insolvent in England and Wales between April and June, which reflects the lowest total since the summer of 2005.
What Does this Low Mean for the Economy?
These personal insolvency figures have been seen as reflective of an increasing strength in the UK economy. Philip Sykes, President of R3, the insolvency trade body said, “It has taken a long time, but with wages outstripping inflation again, people are finding it easier to repay their debits without resorting to insolvency procedures.”
Much of the rhetoric surrounding the economy in recent months has suggested a much healthier outlook then we have been used to over the past few years, and these figures do appear to back it up. The figures could also suggest more careful spending on the part of the UK public, which is a positive sign for the economy moving forward.
Are There Warning Signs?
The fall in personal insolvencies has certainly been welcomed by many, but a cautionary tale still surrounds the drop. Jane Tully, head of insight and engagement at the Money Advice Trust (MAT), which runs the National Debtline warned, “Many households will be able to accommodate this extra borrowing as the economic recovery continues – but we are concerned that many will turn to credit to plug gaps in their budgets.
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