Just days before the Bank of England is expected to pull the trigger on an interest rate rise, this is a stark reminder of how many Britons are in the firing line. Contributor David Birne, Insolvency Partner- HW Fisher & Company.
The number of people slipping into insolvency is up by more than a quarter on this time last year, and the quarterly casualty toll has risen to its highest level in six years. With real wages still growing at almost negligible levels, many Britons’ finances are already stretched dangerously tight.
Those who’ve been relying on credit to fund a more comfortable lifestyle – who are often the poorest and most vulnerable – are sitting ducks to interest rate rises.
While the economy as a whole is holding up surprisingly well, the number of people already falling into insolvency – or teetering on the edge of the abyss – suggests an interest rate rise may drive many more to the wall.
The Bank of England’s rate-setting grandees are determined to return interest rates to more normal levels, sooner or later. But it’s looking increasingly unlikely that they will be able to do so without getting blood on their hands. Where Carillion led, thousands more have followed. The construction sector has maintained the dubious honour of being the industry with the highest number of company failures.
With the attrition rate among builders slowly increasing, the ghosts of the crisis a decade ago are stirring. High profile failures of high street brands like Poundworld may grab the headlines, but there are more livelihoods at stake among the thousands of smaller retailers and builders who are steadily being driven to the wall.
At particular risk are Britain’s army of zombie companies – the weak businesses being kept afloat solely by rock bottom interest rates – who could be tipped over the edge when interest rates begin rising again.”