New figures from the Insolvency Service show that the number of people declaring insolvency in England and Wales reached its lowest level in the last 10 years between April and June of this year and that the number of businesses declaring insolvency is also falling.
The Insolvency Service’s report showed that 18,866 individuals declared insolvency during the second quarter of this year, 29.3 per cent fewer than during the equivalent period in 2014. It is also the lowest it has been since 2005. Meanwhile, the number of firms declaring insolvency is also decreasing, with 3,908 businesses going to the wall over the period, the lowest number since 2007.
Commentators believe this state of affairs to be a reflection of increasing economic strength across the country and evidence of a genuine increase in wages, although some are concerned that debt levels are starting to rise again.
A spokesman for insolvency trade body R3 said it has taken a long time but with wages finally outstripping inflation, people are finding it easier to repay their debts without resorting to insolvency procedures.
However, a spokeswoman for the Money Advice Trust, the body that runs the National Debtline, although welcoming the news, expressed reservations about rising debt levels. She said that while many households will be able to accommodate this extra borrowing as the economic recovery continues, the Trust is concerned that many will turn to credit to plug the gaps in their budget.
This might be evidenced by a sharp increase in the number of mortgages being taken out recently, with 66,682 new mortgages being taken out in June alone, compared with 64,826 in May. However, while lending to individuals has increased, lending to business fell by £5.5bn in June, the sharpest fall in the last four years.