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.

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.

North Wales Plagued by Debt Woes and Recession Troubles

Due to the mounting recession, businesses in North Wales have been shedding jobs at an alarming rate as they try to batten down the hatches and secure their bottom line. The effects on job seekers have been disturbing, with more than 60,000 citizens finding their way to the Citizen’s Advice Bureau of North Wales over the course of 2009, up more than 15,000 from last years numbers. These people seek help due to not only joblessness, but ever rising levels of truly severe debt.

In the first quarter of 2009, new figures show that an astounding 84% rise in redundancy enquiries has occurred. This shocking figure correspond with numbers released by professionals offering Individual Voluntary Arrangement help, many of whom have seen nearly 40% increase in applications for an IVA. Mortgage arrears and fuel debt are combining to push many towards the losing of their homes with agencies struggling to adjust to the sheer volume of requests for help.

The closings of Eaton Electric in Holyhead and smelting plant Anglesey Aluminum have generated job vacancies of more than a thousand lost positions. More factories closing and less manufacturing activity means jobs in North Wales are disappearing faster than new jobs can be lured into the area. This job loss phenomenon is placing more and more individuals at risk for not only losing their property, but having to head straight for bankruptcy as their debt continues to grow.

First Decade of Millennium Draws to Close as Boom & Bust Cycles Examined

The growth of the economy during the first ten years of the 2000’s has proved rocky indeed not only for the UK, but the entire world. This decade started out with a bust and is proving to be ending with an even more impactful bust, according to financial analysts. The UK’s current £178 billion deficit is not a good sign to any eyes, especially those belonging to global financial experts. Economists have proven themselves wrong, banks have been utterly humiliated and the government itself is still in steep trouble if it is not able to pull things out of the fire according to ratings agencies around the globe.

The core problem is that the boom cycles were fueled by debt. That is, debt was taken on in massive quantities as a wager against better times ahead that never have quite come into effect to quite the same scale that was hoped for. Booms that could not be sustained lead to excessive consumer spending and the decade shows that more UK citizens than ever before have faced bankruptcy with many attempting an IVA as their only way out. While these solutions have worked for consumers, it is a telling truth that the statistics are so high now as we approach 2010 with record numbers of UK residents bearing a burden of debt that would have been unthinkable only a few short decades ago.

While Britain’s Gordon Brown helped to avoid a major financial tragedy during the Dot Com Bubble Burst, the moment the panic passed taxes were lowered and ‘investing’ (ie, spending of tax money) increased in the hopes that further economic growth could be found. Even though internet companies did not end up tanking the British economy, today we sit on the brink of an impending economic contraction that is estimated to be nearly 5%, a record not exceeded since before World War II.

Perhaps the worst part is that the UK itself is not the only nation in trouble now. Worldwide, national economies are finding themselves in severe debt. In the East, certain nations have managed to stave off severe debt and actually grow their economies, but in the West, the forecasts are bleak at best. The promising middle years of this decade have done little more than encourage consumers to max credit cards and store cards to what closes in on obscene levels. As a result, consumer specific debt has been accrued at incredible rates, leaving many the worse for the wear as lending institutions sell their debt to unsavoury collections agencies that cause havoc for those debtors left holding the bag.

As manufacturing and other base level economic activities have shifted to lesser developed nations, the UK and the US have experienced a serious accumulation of debt paired with a drop in available jobs for their citizens. While no one can be expected to accurately predict coming events, analysts remain certain that the trouble is not over and continue to endorse solutions such as the IVA or a solid debt management plan for consumers staggering under the burden of severe debt that remains a reflection of their nation’s tendencies.

UK Citizens Urged to Protect Their Portfolios in 2010

The growing national debt of Britain is causing major concern, both at home and abroad as more experts continue to point out the fact that the government is playing a dicey game with debt. While gilts (government debt) have been the traditional means of bailing the country out in the past, today it appears that veteran investors are turning their backs on such investments, potentially causing the government to veer towards even greater troubles than the already colossal £178 billion deficit that the UK faces.

Since gilts are a primary fundraising tool, it could imply severe future damage to the economy should investors remain sceptical of their viability as solid investments. This would push the gilts towards lower prices and higher yields, not a positive thing for the economy. Since ratings agencies may downgrade the British economy in coming months, investors remain especially flighty and prone to placing their money elsewhere. This could lead to further dips in the stock market, unsettling a national economy already teetering at a precarious balance.

Since this economic dip could affect bonds, stocks and even property investments, analysts are advising extreme caution. With so many in debt trouble already, the number of people seeking debt management programmes is on the rise and those entering into an IVA are expected to be joining a very crowded list of people who are quite understandably struggling in the current economy.

Protecting one’s assets is proving to be a critical step to guard against a rough 2010, particularly the first half of the year when the economy will see a serious post holiday drop. Sterling, despite it’s nearly 10 percent rise in 2009 is expected to slip so if investors wait they are likely to find good buying opportunities. Shares remain unstable, but investing experts suggest that investments are best made at the beginning of the year rather than waiting since the last half of 2010 is foreseen to be something of a downward progression for stocks. Housing and property prices should also be sliding, so if investors wait, they will be able to spring upon solid bargains towards the middle of the coming year.

Experts Say UK Could Face Tidal Wave of Bankruptcies as Economy Falters

Financial advisors are foretelling of a coming situation where the number of companies closing in on bankruptcies and in need of emergency financing could reach record levels – up to twenty times the number of companies in similar circumstances today. As banks clamp down on lending and interest raise drift ever upwards, liquid capital is becoming far more difficult for companies to gain access to.

While banks are currently handling companies in a delicate way to preserve their image as resources of the public, things could change drastically in the coming months. While interest rates may be at record lows now, any change, even small changes over time, could push companies into more dangerous waters where costs can quickly spiral out of control. The cheap money available for the last few months has encouraged companies in trouble to borrow while rates are low against fears of an inevitable rise in interest rates. If they fail to handle this debt extremely well, once interest rates begin their ascent, this costs will shoot up, making the debt much more difficult for the company to manage.

Experts insist that if the Bank of England is not careful about when it raises interest rates, it could upset the fragile economic growth that is now starting to take hold. While smaller businesses may well flourish in the current environment, some analysts put the number of companies worth between £10 to £200 million and owned by UK banks, at two to two and half thousand. Those companies all have more debt than they could be liquidated for.

Plenty of investors will be flocking to these underfunded, debt-laden companies in an effort to purchase what are known as turnaround companies. These are companies that might be near the grave, financially speaking, but with the right investments and some re-structuring, often return to profitable, sound companies.

Some investors hold Britain’s economy itself to be worthy of the turnaround status, viewing the nation’s economy as under extremely poor financial management and in need of a new team to turn things back around.

Chancellor Accused of Hiding £60 Billion in Interest on UK Debt

Standing before the Treasury Select Committee, a cross-party group of UK politicians, Chancellor Alistair Darling was grilled about why he had not published the interest cost estimates for Britain’s record setting national debt. The committee’s eldest Tory member, Michael Fallon, directly asked Darling why he had chosen to obscure the fact that the annual interest accumulated on the debt would reach £60 billion in just four years.

Darling, for his part, responded that he had not concealed the numbers of the interest on the UK’s £178 billion deficit in his Pre-Budget Report. He told an outraged Fallon that over the past decade such figures were released on a three year programme and thus, he intended to continue with that tradition. Critics feel Darling is ‘working the system’ to favour his party in the coming elections, scheduled for May of 2010.

Thus far, the world’s most powerful agencies of credit rating have not tarnished the UK’s outstanding impressive credit rating, but after the elections, the situation could change. A downgrade could cause major havoc for the UK economy because it would mean the Treasury would be forced to borrow at much less favourable rates. While the current cost of debt is £30 billion for the time being, this near doubling would place the interest costs at almost twice the amount of the Ministry of Defence’s annual budget.

The cost of the debt itself is due to interest payments called coupons on bonds issued by the Government. These ‘gilts’ are sold through the The Treasury’s Debt Management Office in order to raise capital. Foreign nations and other large funds purchase the gilts and earn interest payments that are paid out twice a year.