Credit-card companies came under fire on Friday night as new figures showed a record number of British people going bankrupt as a result of the country's growing mountain of debt.
UK Department of Trade and Industry figures showed a 37 percent jump in the number of people becoming insolvent in the second quarter of the year. The three-month total of 15,394 is the highest quarterly figure since records began in 1960.
The low interest rates of recent years pushed the UK's total personal debt levels above the ?1 trillion (US$1.78 trillion) level for the first time last year.
The recent slowdown in the economy and last year's interest-rate rises are being blamed for pushing some people over the edge.
The level of personal debt is equivalent to the country's entire economic output in a year and three times the UK's national public debt.
Dan Levene, a spokesman for the Citizens Advice service, said the vast bulk of the debt people were unable to cope with was on credit cards, where typical interest rates were between 20 percent and 40 percent.
"People are being given inappropriate levels of debt," Levene said. "Some of the marketing devices used by some credit card companies leave a lot to be desired."
People were often lured into taking on credit at 0 percent, only to see the rate leap if they failed to make a single payment.
Around one in five of all the cases that Citizens Advice Bureaux (CAB) handle now concern excessive debt, and that share is growing. The average debt of people coming into CABs was equivalent to 14 times their salary, Levene said.
The Liberal Democrat treasury spokesman, Vince Cable, said the figures were worrying.
"The government needs to stop being complacent and take action to tackle the problem of personal debt by clamping down on unsolicited mailing, reckless lending and misleading advertising," he said.
A manager at a high street bank, who declined to be identified, said debts were the biggest problem he dealt with. "I have people coming in front of me every day with ?40,000 or ?50,000 or more of debt. It's just amazing how much debt people have managed to run up," he said.
The insolvency practitioners Grant Thornton agreed that unsecured (non-mortgage) debts were spiralling out of control, but cautioned that debtors had a responsibility not to borrow too much.
"The UK's mountain of personal debt continues to have no peak in sight," said Mike Gerrard, a personal insolvency specialist at Grant Thornton.
"The problem rests squarely on excessive credit and store card use, personal loans, and often unsustainable `champagne' lifestyles," he said.
The company said it had recently advised someone who had run up ?312,000 of debt on 63 credit cards.
The high street banks this week admitted that customers have been having difficulties repaying credit card debts and other loans. Barclaycard, the credit card arm of Barclays, yesterday reported a 17 percent fall in profits to ?379 million after having to put ?508 million aside to cover problem debts -- up 42 percent on the same time last year.
The Department of Trade and Industry figures showed strong growth in the number of people who had elected to make what is called an individual voluntary agreement (IVA), whereby they work out a plan to repay their creditors gradually, rather than straightforwardly declare bankruptcy.
IVA numbers were up 70 percent in the second quarter on the same period last year while bankruptcies were up 27 percent to 11,195. Both are record highs and together they make up the 15,394 of total personal insolvencies during the period.
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort
RSS