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Bankruptcy levels set to soar in the UK

As the UK economy starts to show signs of potential recovery, there are serious concerns about debt levels within the UK consumer sector. We have already seen a significant jump in bankruptcies in England and Wales and many experts expect a mushroom effect in the short to medium term as the full financial crisis begins to hit home. The previous record for bankruptcies, or personal insolvency, prior to 2009 was 107,000 in 2006. Many believe this figure could be shattered with around 150,000 UK consumers set to "go under" in 2009.

Even though many UK banking situations have set aside significant funds for these potential write-offs there is concern that additional capital will be required to cover what is turning out to be a very difficult situation. As we have mentioned on a number of occasions, there is a substantial lag between bankruptcy and insolvency numbers and a potential recovery in the UK economy. There is also a similar situation regarding unemployment which will continue to rise for some time even after the economy has "turned".

It will be interesting to see how "understanding" the UK financial sector will be to the growing number of UK consumers over laden with debt.

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