PREDICTIONS are being made that next year could see a sharp rise in the number of personal bankruptcies and asset repossessions across the South East – including the Thames Valley – as inflation and interest rates begin to climb.
A leading insolvency expert is warning that consumers will struggle to absorb rising levels of debt, with fears that inflation could reach around 5%, and interest rates thought to be heading to 3.5% by 2023.
Stephen Grant, partner, accounts and business advisory services for the South East and an expert in personal insolvency at SME-focused accountancy firm Azets, says there are clear signs that households and individuals will be facing significant increases in the cost of living, and debt levels.
He said: “Interest rates have been so low for so long that there is a generation of consumers inexperienced in managing a sudden rise in their overheads and costs. Interest rates tend to be the main mechanism by which the Bank of England controls inflationary pressures, and all the market commentary points to rising rates.
“Any increases will mean a significant jump in monthly costs, which will be on top of rising costs for normal household expenditure for items such as energy, fuel, food, clothing and lifestyle expenditure. Our concern is that a vast number of households are running very tight budgets and have accumulated considerable debt, leaving them with little room for manoeuvre.”
Mr Grant said that households will have less funds for payments towards loans, credit cards, debts, with the situation not helped by the end of the £20 per week uplift to Universal Credit.
“Families could also be under further pressure with payment holidays on loans and credit cards now finished and the courts open to action from creditors,” he said.
Anyone concerned about their debt is urged to tackle the problem as soon as possible by reviewing their finances and taking early advice.
“There are a number of options available, including setting up Debt Relief Orders and Individual Voluntary Arrangements,” Mr Grant said.
“The difference between 2021 and 1991 is that there is far more support in place for anyone facing financial problems and rising levels of debt. It is, however, important to take control of the problem quickly, and be in a position to access all the advice and support that is now available.”
Azets has branches in Reading and Newbury.
