Bankruptcy Beckons As Britons Feel Credit Squeeze

03 January 2008

LONDON: UK accountancy firm Grant Thornton has joined the serried ranks of doom prophets in predicting a 2008 financial apocalypse for many of the nation's hard-spending consumers.

It warns that the total number of personal bankruptcies will climb to at least 120,000 this year, almost three times the number in 2004.

Rises in mortgage payments and food and fuel costs are beginning to bite, say debt experts. To which consumers' response been to flourish their credit cards and increase personal bank loans in a bid to keep pace with demands on their incomes.

Retailers accordingly reported a better-than-expected December as shoppers seemingly opted for a final spendfest before their credit chickens come home to roost.

Grant Thornton believes as many as one third of bankruptcies in the first three months of 2008 will be caused by "excessive Christmas spending".

Comments Mike Gerrard, head of the firm's personal insolvency practice: "Sadly, many individuals spend up on credit at Christmas and pay no heed to the financial warning bells.

"Come January, they find themselves in a situation where previous financial woes are compounded by the bills arriving from the festive season and in these situations insolvency becomes the only way out."

Consumer Credit Counselling Service chairman Malcolm Hurlston concurs and predicts a "quite substantial" rise in bankruptcies in the coming year.

Data sourced from The Independent; additional content by WARC staff