900 going bust every week

By JANE PADGHAM
Updated:

 

A RECORD number of people went bust in the second quarter of the year, sparking fresh fears about a looming debt crisis.

According to the Department of Trade and Industry, 11,214 people in England and Wales became insolvent in the April to June period. The number, which works out at 934 a week, is the highest since records began in 1960.

That was a 7.9% increase on the previous quarter and up

28.7% on the same period a year ago. Within the total, there were 8,740 bankruptcies and 2,474 individual voluntary arrangements.

The numbers will fuel concerns that, lured by low interest rates, many people are saddling themselves with debts they cannot afford.

The Bank of England yesterday raised rates to 4.75% in a bid to curb consumer borrowing after recent figures showed Britain's household debt has passed the £1 trillion mark.

Robert Pick, personal insolvency specialist at Grant Thornton, said: 'These figures highlight the fact that there are huge financial difficulties for many individuals. With rates going up, many people are thinking, 'Let's throw the towel in and get this over and done with'.'

Howard Archer at consultant Global Insight said: 'Higher interest rates are increasingly pushing heavily indebted people over the edge.'

There was better news for the corporate sector, with the number of firms going bust totalling 3,151 during the second quarter, down 17.4% on a year ago.

PricewaterhouseCoopers said at the current rate around 40,000 people would become insolvent in England and Wales during 2004.

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