Personal insolvencies rose across England and Wales to a seven year high in 2018, 115,299 people went insolvent in 2018, official figures show.
The figures released by The Insolvency Service are made up bankruptcies, debt relief orders (DRO) and involuntary arrangements (IVA). Of those who went insolvent in 2018, 61.6% used an IVA, 24% used a DRO and 14.4% went bankrupt.
Stuart Frith, president of insolvency and restructuring trade body R3, said: “As banks and other lenders have tightened their credit standards in response to the Bank of England’s concerns around consumer over-indebtedness, many people have run out of road.
“In previous years, the ‘helicopter money’ provided by PPI refunds, along with generally less stringent lending requirements, helped to paper over the cracks that opened up as a result of a decade of persistently stagnant wage increases, but these avenues look to be closing themselves off.
“People are having to spend more of their income on housing and transportation, leaving less left over for savings and making budgets more vulnerable to shocks.”
Mr Frith said of the corporate insolvency figures: “The pressure point for businesses most frequently cited by our members is weak consumer demand.
“People just don’t have much spare cash at the moment, reflected in the rise in the number of personal insolvencies also confirmed today.”
He continued: “Every business is part of a network and one struggling business will affect others.
“R3 research from the middle of last year found that one in four UK companies had taken a financial hit following the insolvency of a supplier, customer or debtor in the previous six months, illustrating the reach and impact of the ‘domino effect’.
“Meanwhile, uncertainty around the shape of the final Brexit deal and future EU-UK trading relationship is already forcing businesses to hold off on investment decisions, again affecting their suppliers and customer networks.
“It has also prompted some companies to stockpile, putting a squeeze on cash flow and reserves.”