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Increase in Energy Costs is Leading to Big Debt Problems in the UK

With concerns over debt and bankruptcy continuing, it seems that every financial agency and each part of the government is trying to figure out why. While there are many reasons for the rise in bankruptcy in the UK, the continued increase in the cost of fuel and fuel bills is one of the major factors affecting citizens. Unable to keep up with the rise in energy costs, more and more people in the UK are spiraling into uncontrollable debt and being forced to look into options such as bankruptcy or individual voluntary agreements.

uSwitch.com has undergone a number of surveys to bring about these results. It is surprising to note that energy costs have actually decreased in the last year, but are still a great deal higher than they were back in 2008. There studies showed that a stunning 13 percent of UK consumers had to negotiate certain deals or come to payment arrangements with their suppliers in order to overcome their debt and find a way to pay their bills. This was only in the third quarter of 2009 alone, and that kind of increase is expected to become the norm throughout at least the first half of 2010.

An energy expert that works for Thomas Lyon, which is a website that compares prices all over the UK, noted that UK consumers should do their best to cut back on their outgoing energy costs. While that seems to be somewhat of a given, the expert notes that annual bills are actually coming in at 327 pounds higher than they were just two years ago. Of course energy suppliers could help consumers out as well, and there are many that feel that the government needs to step in so citizens can feel the benefit in terms of their fuel bills.

Even earlier on in the week, moneysupermarket.com noted that fuel bills could continue to rise as much as ten per cent this year thanks to the recent surge in cold weather. Even when debt, bankruptcy and other economic factors are affecting citizens, it is incredibly hard not to expect them to increase their energy use when the weather turns this cold. It is human nature to survive comfortably, yet that comfort could lead to another increase in debt management problems over the next year.

While citizens are appealing for some sort of governmental intervention, it appears that many governing bodies are stuck between a rock and a hard place. Any extra interference run could slow down the economic recovery process, and that is the last thing that the UK needs at the moment.

Some people can take solace in the fact that energy companies are quite willing to negotiate debt management plans and unusual payment programs, so more people are finding a way to keep the heat up even though money is running low. However, if the cost of fuel bills continues to rise there may be less and less options for UK consumers unless the economy recovers faster than predicted at the moment.

2010 Could be the Year that Bankruptcy Rates Reach 24,000

Several reports that have surfaced recently are showing that hundreds of people within Scotland are going to go bankrupt or continue dealing with bankruptcy each and every week. Many business advisers are saying that at least 24,000 people will declare bankruptcy which is double the 13,000 that were affected by bankruptcy in 2007.

PKF has gone so far as to warn that this pattern and increase in bankruptcy could continue for at least a few more years as the recession impact will leave the UK reeling for years to come. The corporate recovery partner for PKF Bryan Jackson believes that these bankruptcy numbers are in large part thanks to many Scottish citizens obsession with debt over the last 10 years or so. Considering the fact that Scottish bankruptcy is running twice as high as Wales and England at the moment, it is obvious that this issue is going to be a problem for years to come.

The good news that comes out of this is the fact that it doesn’t appear that insolvency and bankruptcy are on the rise any longer. If they flatten out at 24,000 it is much better than a continuous increase that the country is used to seeing over the past two years. Some people are arguing back saying that more people are claiming bankruptcy simply based on the ease of the process, and not due purely to debt.

However, these numbers still show a definitive rise in personal indebtedness that other countries simply are not dealing with. No one can deny the fact that the estimated 460 people in Scotland that go bankrupt each week is a staggering number, and it is going to take a lot of work to get away from the problems.

The figures used by experts to make these predictions have been taken from the Edinburgh Gazette, where all personal bankruptcies are forced to be listed by law. PFK continued to warn that things are going to get worse before they get better for homeowners as interest rates and unemployment are most likely going to continue to rise for quite some time. This could force many homeowners into some serious financial decisions involving bankruptcy, but there is hope that reduced mortgage costs could save a lot of people.

The stagnant housing market is one of the reasons why so many Scots are having to turn to bankruptcy. In previous years many people would use their properties to help pay off their debts, but the economy has simply not made that such an affordable option anymore.

It may be hard for a lot of people in the UK to feel good about the future, or find ways to deal with their debt. Things are expected to get much better, but the sad news as pointed out by Jackson is the fact that these numbers should remain the same for quite some time. The credit boom and long term impact of the recession are going to mould the future of the UK and many people are just going to have to ride it out.

Europe Trying to Recover Economic Trouble and Debt Crisis

2010 is going to be the year where a number of nations try to get their finances in order and push forward to economic recovery. The banking systems have been crashing, the economic recession has been building, and the euro zone has been dealing with bankruptcy and an all out debt crisis.

The European Commission itself has warned many people hat public finances in half of the European nations are in serious trouble and in danger of being deemed unsustainable. That means that each and every government in the euro zone will be doing their best to balance their economy, fight debt, and fix debt in the public sector without affecting the economic recovery too much.

Even the most optimistic financial advisors are forecasting trouble in the future as rating firms are readying themselves to downgrade governments. Spain and Greece have already seen their statuses downgraded while Portugal and Ireland have been warned staunchly. There are a number of other countries that have been threatened and need to shape up before they face some serious repercussions.

In a December report, a number of agencies noted that the lack of a debt management plan, the number of people having to opt for an individual voluntary agreement, and the overspending means the UK could be downgraded as well. The government needs to start articulately more responsibly and give into a new fiscal pace.

At the end of 2009, the Euro was slipping down from its recent highs and bank stocks were falling as well. There were perceptions that government bonds could lose their value and economists are genuinely concerned that it could take years for fiscal damage to be repaired. Collapsed tax revenues and the recession have also sent welfare costs and bankruptcy soaring.

Because of debt management plan problems, billions of Euros had to be dedicated to stimulus plans and bailouts of banks which was the icing on the cake for the collapse of governmental finances. Aside from all of this, investors are also quite worried about the potential for a double dip. This is the idea that a purely European recession could come about if budget consolidation and debt management plans are put into place at the wrong time or in the wrong way. Everything needs to be done perfectly in order to prevent the recovery from stopping yet keep enough businesses and consumers out of bankruptcy.

In the Euro zone, budget deficits have swollen all the way up to 6.4% of the GDP, which is a drastic increase when compared to the 2% that the area was dealing with only one year ago. Certain forecasts have shown that the swell will continue to increase to 7% at sometime in 2010, before things get better.

It is going to be all about national leaders in the Euro zone to increase pain for citizens in order to stimulate the economy. This will probably mean higher taxes and big spending cuts, as well as a large scale bank of social programs. Everyone will need to wait to see what happens but everyone should be prepared to deal with major changes.

Consumers Becoming More in Touch with Finances Due to Bank Crisis

Recent surveys have shown that UK consumers are far more connected and educated when it comes to their personal finances, and the major reason has been the bank crisis that the nation is dealing with right now. However, even though consumers are more aware surveys also showed that fewer citizens are paying down their debt or employing a debt management plan.

A separate survey commissioned by YouGov also noted that many UK consumers are willing to switch banks or move on for better plans, which means that banks are going to have to up the ante very soon. Consumers noted that they are quite scared off locking in their money for a lengthy period of time or putting all their eggs in one basket in terms of banking institutions. While that isn’t much of a debt management plan, it will definitely affect the way banks conduct business in the future.

While consumers are worried about the safety of their bank more than they were in the future, they are quite pleased that they know more about their financial situation than they used to. All of these reactions come on the heels of the collapse and bankruptcy of banking institutions in Iceland, Bradford, Bingley, and Northern Rock, and all the government rescues that have saved other institutions from bankruptcy.

Despite all of the awareness, pollsters noted that UK consumers were still not doing much in terms of protecting their finances. Less than half of the people in the survey said they were paying down more debt than they used to and less than 40% were putting more money aside in terms of their debt management plans.

In all, it does appear that consumers are taking more and more steps to understand their finances, but have yet to make any substantial moves to avoid debt and bankruptcy. It is a clear indication of a big difference in action and inaction but many feel that it will change drastically over the next year or so.

Another note from the survey is the fact that it appears many more UK consumers are comparing banks and contemplating switching their money over. That is good news for policymakers in the government as it means that there will be far more competition in the high end banking world. The government has been forcing certain institutions to divest part of their companies and consistently gives bonuses and rewards to new entrants into the industry.

Over half of the participants in the survey said that they would now consider using a provider that is non-traditional, which is a huge jump from recent years. 54% of consumers also said that they were now far less willing to invest or lock their money away for a long time.

In the end, the survey made light of a number of issues and gave new insight into how UK consumers are dealing with economic struggles, bankruptcy, and potential debt. Whether these trends continue or teeter off remains to be seen, but increased knowledge is always a good thing for consumers.

UK Government Debt Hitting All Time Highs as Public Calls for Debt Management Plan

The International Monetary Fund has come out with new statistics showing that the government debt in the UK is going to hit nearly 70% of its entire economical output this year. This has made it to see why so many agencies and credit lenders have been pointing out the need for a debt management plan for the nation, as bankruptcy looms for many people and companies.

This rise in debt means that the UK’s AAA rating, which is only available for the safest borrowers in the world, is in grave danger. If the government loses their AAA rating it is undeniable proof that the nation’s debt and bankruptcy issues are spiraling out of control.

While headlines and statistics such as this have made many citizens scared of the future repercussions, the good news is that things really are not as bad as they seem. When compared to other leading, developed nations, the UK’s 68.7% GDP debt percentage is much better than countries such as the US, Italy, and Japan just to name a few. The US is dealing with a percentage of 84.8%, Italy is seeing its percentage rise to over 115% and Japan is running away with a percentage of 218%.

When looking at it this way, it is unfair to always through around words such as bankruptcy, debt burden, or beg for a stricter debt management plan.

However, it isn’t all positive for the UK as lenders are pointing out the way in which the nation’s debt has been compiled. While other countries have a worse percentage, the UK’s number was just 44.1% as little as two years ago which could be quite a bad sign for the years to come.

Standard and Poor’s credit rating agency has noted that if the government continues to support banks and the financial sector they way they are doing, then their debt levels could reach up to 100% of their GDP in the next two years. The problem is that if that debt level does come to fruition then there is likely no way that the UK can keep their AAA rating. To take it even further S and P have already taken action against the government and has begun to view the nation as AAA negative for the first time since it began analyzing debt in 1978.

The UK is the only country to get downgraded in this fashion this year and last year and another agency, Moody’s, has said they will cut back their AAA rating if things do not change soon.

Thus, in the long run the major concern in terms of a debt management plan, bankruptcy, and debt, is all targeted towards the future and not the present. While other nations are in the same boat, that is hardly the relief that citizens are hoping to see soon. It remains to be seen what the government will do but there are a number of plans in the works and potential bills that need to be discussed in parliament very soon.

Manchester City’s Debt and Losses Increases to 92.6 Million Pounds

In recent news Sheikh Mansour bin Zayed Al Nahyan has just been forced to convert exactly 305 million pounds into equity from his loans in order to help the team avoid bankruptcy issues and improve its debt management plan. The soccer club’s losses have increased to a stunning 92.6 million pounds, which is horrible news for the team but has to make UK residents feel a little better about the debt problems and bankruptcy that they are dealing with.

While Sheikh Mansour has no money or real bankruptcy issues, considering he is a member of the ruling family of Abu Dhabi, he has spent millions of pounds on new players that have not brought the results he had hoped for. Since his takeover in September of 2008 the team has been unable to compete with rival Manchester United in the way he had hoped.

The loss of 92.6 million pounds is the second highest loss ever in Premier League history, and is second only to Chelsea’s loss of 132.8 million pounds in 2005. While sales have increased for the debt, it has not helped in terms of a debt management plan and if the increase from a 32.6 million pound loss last year continues, the team could under some major changes.

If there is any fear of true bankruptcy of the team for fans, they can take solace in the fact that Sheikh Mansour gave permission for the team to acquire Robinho for 32.5 million pounds. That is on top of the 100 million pounds that he has thrown at the likes of Emmanuel Adebayor, Gareth Barry, and Carlos Tevez.

The team also made a statement which sounds nothing like they are putting in place a debt management plan, as they have noted that these losses are a sign of things to come for the near future. The major acquisitions may take years to fully pay off, if they ever do, and the team and its owner is just going to have to patient.

That same patience is going to be a virtue for many U.K residents as the recession seems to veering off, yet there is still a lot of work to be done.

On top of signing Robinho, Sheikh Mansour purchased an additional 89.6 million pounds worth of stock in the team in order to show fans and City’s supporters that he is committed to the team for years to come.

The big move from Sheikh Mansour is linked to Chelsea owner’s decision to turn 340 million pounds of loans into equity just as 2009 came to an end. Both moves have a lot to do with the recession and bankruptcy issues that surround the U.K. as the UEFA has adopted a new plan to ban teams from certain competitions if they are carrying too much debt.

What exactly is considered too much debt has yet to be determined, but these moves and new rules are sure to have a major impact on the Premier League for years to come. But it doesn’t look like it is going to change the spending and loaning ways of the big ticket teams in the league to say the least.

You are Not Alone in Debt: UK Economy Dealing with Untamable Debt

Earlier this month Alistair Darling, the Chancellor of the Exchequer in the UK, stated that the entire United Kingdom will be facing incredible, economical challenges over the coming years thanks to national debt. The statement came during an argument in parliament over the newly proposed Treasury’s Fiscal Responsibility Bill.

Darling has stated numerous times that the bill itself will go a long way in terms of strengthening the nation’s fiscal responsibility and should be seen as a necessity if the U.K. wants to continue to allow sustainable borrowing as the down-trot ten economy starts to work its way out of a funk.

While the statement from Darling isn’t necessarily good news for U.K. citizens, it definitely does feel good to know that we are not alone in terms of dealing with and trying to find ways out of substantial debt.

At the moment the U.K. is trying to find ways to deal with the all time high deficit of 12.6% GDP, which is in fact the largest deficit among all of the developed nations in the world. Every political party in the U.K. agrees that this deficit is something that cannot continue to be sustained, but everyone seems to be divided on how to resolve the matter. What may in fact be even worse is the fact that the nation’s budget deficit is expected to double over the next few years.

In terms of the Fiscal Responsibility Bill itself, it was originally proposed to the parliament on December 9th and states that the government must decrease their borrowing every year from 2011 all the way to 2016. This will be measured based on the U.K’s GDP each year. The key to this bill in the eyes of Darling is the reduction in bankruptcy in the nation while still ensuring that the government does not interfere with the upturn of the economy and end of the recession. While the opposition seems poised to support a plan that includes tight fiscal tightening, Darling feels that that type of action would be more detrimental in terms of the recession coming to an end and the use of debt management plans.

When the bill was discussed in parliament, opposition treasury chief George Osborne called the bill a “feeble stunt” and complete nonsense, and believes that the parliament needs to take much hastier actions.

However, there is more good news for people dealing with debt management and bankruptcy. Darling and other parliament members noted that it appears as if the U.K. will work its way out of the recession by the fourth quarter of this year. While the statistical office has not confirmed these stats yet, there are a lot of positives coming this way. Whether the bill continues to see support or whether or not the government cuts back on borrowing remains to be seen, but at least there is now a light at the end of the tunnel.

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