Personal insolvency cases will increase, says R3

The average number of new personal insolvency cases in 2008 in England was 24 people out of 10,000 according to R3 an insolvency trade body.

Its findings were published today (7 July) in a ‘bankruptcy map’, which revealed the regions and local authorities that have seen the highest proportion of new personal insolvency cases that occurred in England and Wales

In 2008, 37 people out of every 10,000 in the north east became insolvent and this figure is likely to increase due to the recent announcement of cuts in public sector jobs, said Steven Law, president at R3.

In London, 17 people out of every 10,000 became insolvent in 2008 and Mr Law believes this figure is less due to the Capital’s vast employment opportunities.

Mr Law said: "Prior to the recession, the north east had a higher than average unemployment rate and the region’s construction industry was badly hit during the economic downturn so it is understandable that personal insolvencies are more common there.

"Unfortunately, with the announcement of public sector job cuts, it is likely that the figures will worsen, especially in areas such as the north east where public sector employment is high."

Many of the top 10 insolvency hotspots are coastal towns such as West Devon, Plymouth and Hastings and these findings do not surprise Mr Law.

He said: "Tourism and leisure services businesses are often the main employer in these areas and, when people are reining in their spending, these services tend to be the first affected which means businesses reduce staff hours or cut jobs; or replace permanent jobs with temporary positions."

The 2009 figures will be released later this year.

Source: ftadvisor.com