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Deloitte comments on Q1 2012 personal insolvency figures

4 May 2012

Commenting on today’s Q1 2012 personal insolvency statistics, Louise Brittain, partner in Deloitte’s Contentious Insolvency team, said:

“While the total number of individuals entering a formal insolvency process fell by 5% from the same period a year ago, the slight decline in figures does not reflect the crippling financial difficulty that is still being felt by households across England and Wales. 

“Bankruptcy levels have shown a 5% increase from Q4 2011.  Small business owners are likely to have formed a significant amount of this percentage increase, as suppliers to these businesses are unable to provide or extend credit and increased uncertainty takes its toll. The percentage of bankruptcy orders involving trading debts (self-employed bankrupts) was 22% in Q4 2011, a significant increase from previous years.  News that the UK has gone into double-dip recession will add a further blow to economic confidence.  

“The number of people entering individual voluntary arrangements (IVA) fell by 10% to 11,694 from 13,047 in Q4 2011.  This is due to a large number of individuals simply not having the assets to offer their creditors.  The results from Deloitte’s Consumer Tracker show that more than half (51%) of people feel pessimistic about their household’s disposable income, a slight increase on 49% in the last quarter. With price inflation continuing to outstrip wage inflation, household budgets will continue to be squeezed. The decision by several mortgage lenders to tighten their lending criteria will put added financial pressure on homeowners.  

“The economy continues to remain fragile and with households and business owners alike feeling the pressure from tightened lending conditions, tax rises and the prospect of job losses, we cannot count on the decline in personal insolvency figures continuing as the year goes on.”

Ends

In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

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