Extended Recession Turn UK Bankruptcies At Record High

The extent to which the downturn has constricted its noose around the UK's economy was exposed yesterday in the statistics released by the country's Insolvency Service that illustrated that 15,535 companies went out of order and 67,428 people were bankrupted in England and Wales in 2008.

The last quarter demonstrated the highest insolvencies, indicating the government's helplessness in managing its enormous and untenable debt as economist painted an even worse picture saying that this was just the point of the iceberg.

It has been indicated that the last quarter had 29,444 personal bankruptcies or individual voluntary arrangements (IVA) which was a rise of 19 per cent and of it 19,100 were bankruptcies and 10,344 were IVAs.

At present an estimated 110,000 people are in individual voluntary arrangements and more than 700,000 people who are coping with their debts on their own.

However, the December lending figures have reported that numerous people have moved their debts to personal loans and credit cards, which pull towards a higher interest rates as compared to previous year as banks have increased interest rates for unsecured lending. This coupled with bankers and lenders in some cases denying to intense borrowers' mortgages will force already loaded debtors into insolvency.

Whereas Worse economists suggested that these figures have not pointed and with companies resorting to reduction in jobs each day, people will discover it even more hard to handle their debts and the UK should be ready for even worse figures in the future if the government is unable to end the country's economy from going down even further.

Although the Bank of England trim down its official bank rate for the third time in three months, with the latest slash two days back by 0.5 percentage points to 1.0 per cent, carrying the interest rate paid on commercial bank reserves to an historic low of 1.0 per cent in it may assist some people but may not end the insolvencies from increasing.

On the other hand, the UK's Office for National Statistics had also released its figures last week, illustrating that the country had two successive quarters of negative development, with the economy lessening by 1.5 per cent in the final three months of 2008 impelling analysts to forecast a long and extended recession.

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