LONDON (Reuters) – The number of Britons falling into insolvency soared in late 2018, according to official data that will likely add to unease over the health of Britain’s consumer-led economy ahead of Brexit.
There were 34,108 individual insolvencies in England and Wales during the fourth quarter, the most since the second quarter of 2010 and up 35 percent on a year ago, the government’s Insolvency Service said on Tuesday.
The increase was driven by a record number of Individual Voluntary Arrangements — agreements to repay creditors that are short of declaring bankruptcy.
For a graphic on UK personal insolvencies rise dramatically in Q4, see – https://tmsnrt.rs/2BaY15i
The figures chime with other signs of vulnerability in Britain’s consumer economy, coming two months before Britain is scheduled to leave the European Union.
Official data earlier this month showed British shoppers cut back on spending in the three months to December for the first time since last spring.
The Insolvency Service said 3,949 businesses in England and Wales fell into financial distress during the fourth quarter, up 11 percent on a year ago, according to seasonally adjusted data that exclude “bulk” closures of personal service companies.
“After three years of relatively flat numbers, 2018 saw insolvencies creep back up to levels last seen in 2014,” Stuart Frith, president of insolvency and restructuring trade body R3 said.
“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.”
Last week Bank of England Deputy Governor Ben Broadbent said he was puzzled by widespread warnings that household debt in Britain had reached unsustainable levels.
Growth in household debt, rather than levels, had proven to be a better indicator of financial distress across different countries, Broadbent said.
(Reporting by Andy Bruce; Editing by Ken Ferris)