Sky News senior business producer Peter Hoskins

Are more people around you struggling to keep their heads above the financial waterline or do you think we're coping pretty well with the credit crunch?

I ask because looking at today's official insolvency figures you might feel reassured that some of the gloomier predictions about the effects of the credit crunch are proving to be unfounded.

The number of personal insolvencies rose by just 1.7 per cent over the last three months.

That's up by just 410. Yes, that's right, only 410 more people went bust in the first 3 months of 2008 compared to the last quarter of last year.

Of course, behind those figures there are many sad personal tales, the total figure is 25,264.

But given that we've been cowering under the shadow of the lending squeeze since last summer that looks pretty good to me.

So is this a case of 'Credit crunch. What credit crunch?'

Not according to Liz Bingham, Partner at accountancy giant Ernst & Young. "The full impact of the credit crunch hasn't hit consumers yet but I would expect it to by the end of the year."

She thinks personal insolvencies will rise to the kind of levels seen at the end of last year, but others are even more pessimistic.

There are plenty of voices - including the highly-respected City commentators Capital Economics - warning that there'll be record numbers of people going bust this year as homeowners struggle with higher borrowing costs and rising food prices.

They say this is "likely to be just the tip of the iceberg... with personal insolvencies set to reach new record highs."

So, are today's figures the calm before the bankruptcy storm or evidence that all the gloom and doom in recent months has been seriously exaggerated?

Comments

[Robert, Scotland 5 May 2008 15:48:00]

I think we have yet to see the biggest insolvency in this Country. It could well be this Socialist (spend,spend,spend) Government. This could happen when it is eventually forced to come clean and put the cost of PFIs' (private finance initiatives) on the Nation's balance sheet.
This deceptive accountancy is just the sort of shady book-keeping that Mervyn King and Gordon Brown have criticised all the World banks for recently. Adding that it was this that led to the credit crunch once the banks made their accounts less "Enron".

[Dennis, Cramlington Northumberland 5 May 2008 11:25:04]

Let us just hope that these insolvency figures are not swelled overmuch by the 2,000 innocent N Rock staff soon to be without work - in an area where redeployment is unlikely for most - as a result of this Government's sorry unprepared and inept handling of the 'Credit Crunch'.

As of course, most have mortgages, probably large ones with the same Government, which of course, to rub salt in their wounds, are now subject to vastly increased repayments, whilst their house values are falling fast...

Add in the fact that their monthly savings in the Company and Government approved share-save schemes etc are now virtually worthless - following the notorious 'stand & deliver' action - and one can easily appreciate that their new forced reliance on the state benefit system may lead to insolvency whilst living on the streets as there are no social housing left available - most having been rented to hard working but cheap visitors from foreign lands.

And if Dick thinks he can win back us friends by now offering a few crumbs from the rich to pay to the poor, then it is a not a case of Robin Hood but a case of Robin Hoodwink....or possibly Robin Everybody?

[Dennis, Cramlington Northumberland 5 May 2008 11:02:20]

Let us just hope that these insolvency figures are not swelled overmuch by the 150,000 N Rock small shareholders - mostly senior citizens - who have had their property 'seized' by this Government.

Insolvent perhaps when they receive the rumoured grand total of £25 in full and unfair compensation for losing their £6,000+ value of shares, and are then unable to repay their mortgages to the same Government.

Insolvent perhaps when meanwhile they are unable to afford to purchase any reasonable quantity of bread, eggs or heating and fuel to meet their very meagre needs.

I bet they all now wish that they had been 'benefit cheats' living off the state, instead of being 'old-school' and prudent - before being Dick Turpin-ed.

[Michael Cornwall 2 May 2008 13:40:53]

Credit crunch no credit crunch.Good question.I have 3 shops so i gauge,what is in front of me,and ask people in the trade how things are around the UK. Abig wholesaler told me dead in the North elsewhere patchy,100 of his 200 customers were active selling lower priced items. In my main shop my april figures beat last april,but I do not feel that there is consistency
It does not seem vibrant,1 of my shops had a terrible week in April. From my view point it seems the country needs good news.I did like the Blog last week on the £300 tax rebate,because it seems that America is attacking head on the problems,Citibank today saying 'No the BOE has it wrong things are really bad still' is funny to me its like they are batting for the other side.being realistic is fine positive/negative something else.I think from your responses to your blog and responses to local elections people want positive and the feeling of positive leadership.Listening on Sky news today the 2 lady mps were too quick to attack the conservatives,it is not what one wants to hear, one wants to hear what are you going to do .

[Khalid 2 May 2008 12:34:28]

Sir
Thus far as many a matter surrounding doom and gloom, it is a matter that can be viewed both positively and negatively.
On the positive side, it keeps people on their toes thus far as to ascertain their fundamental persona priorites, whilst at the same time allows them to escape the misery of debt.
Many an individual whom so applies for insolvency does so on the basis that it is the best option, receive ill judged advice on the basis of costs arising for representation etc.
Now, in the case of mortgages for example, let's assume a family has monthly repayments circa £700 and finds that cost of living rises will not allow the family to enjoy its daily bread.
As the term agreed in a majority of cases is 25 years, then both lender and borrower must agree to deffered lower repayments, lets say £500 until such a time that living standards become bearable.
Utilities on the other hand do not help but exasperate the many a household and unless the powers to be open their eyes and do something about it forthwith, the doom and gloom will be passed on to the many an ombudsman entrusted to ensure market as well as legislative compliance, so as to ensure unfair terms do not further the injustice endured, notwithstanding the fact surrounding health and other such social contract requirements thus far as water, gas, electric etc.
Ombudsman have always practiced the art of adjudicating on probability, however, times have changed, moods hardened and things will happen, believe me, for the better.
On the negative side, it will leave many with torn [Memories] however, will move on to better things for all concerned, won't they [Elvis Presley]?