Debt levels are bad & just the tip of the iceburg

Britain owes £1.46tn, i.e. £1,460,000,000,000, the majority of which is made up of mortgage debt £1.23tn (84%). £231bn (or £0.23tn) is in unsecured consumer credit, of which £54.5bn is on credit cards.

Moody's the credit rating agency has stated that British Credit Companies are writing off an average 10% of their debts (up 50% from a year ago). Even this increase does not match the USA, where the IMF state that up to 14% of credit card debts will have to be written off.

The upshoot is that credit cards are not as freely available and that interest rates are now increasing. The increase in bad debts is supported by the latest insolvency figures for Q2 2009, which state

"There were 33,073 individual insolvencies in England and Wales in the second quarter of 2009. This was an increase of 27.4% on the same period a year ago.

This included 18,870 bankruptcies, 15.3% up on Q2 2008, 12,225 individual voluntary arrangements, a 27.4% rise on the same period and 1,978 debt relief orders."

Things are no better in the corporate world, according to the insolvency figures as reported by Accountancy Age

"Corporate breakdowns showed 5,055 compulsory liquidations and creditors’ voluntary liquidations in total in England and Wales in the second quarter of 2009 (on a seasonally adjusted basis). This was an increase of 2.9% on the previous quarter and an increase of 39.1% on the same period a year ago.

1,529 other companies collapsed in Q2 2009 (not seasonally adjusted) comprising 345 receiverships, 1,027 administrations and 157 company voluntary arrangements. This was a 22.7% increase on the same period a year ago."

and if you think that is bad, most experts expect the situation to get worse, with one commenting these figures represent the "tip of the iceburg"

The Infantry gets hardest hit

Based on data from the Sunday Times Business Section, almost a fifth of the young people (18-25) in GB are out of work, with the figure likely to hit 1m in September 2009. Another 730,000 of this age group are not in education, employment or training. It is not any better in Europe with 12 of the 27 EU states having jobless rates among under 25's above 20%.

Although alot of focus has been on jobs lost in the City, CIPD research states that "blue collar" unemployment has rsien at three times the rate of white collar and professional workers in the recession. What is the long term impact? ST quote "One study showed that for lifetime wages for those who suffer unemployment when young are between 13% and 21% lower than for others"

Another major impact is that without jobs or even the prospect of jobs, what will the youth do? It's not called youthful energy for nothing. A recent Time article stated that for many young people in NI, they have not felt the benefit of peace and that a return to interface violence was at least something for them to do built on a premise of restless energy and a need to blame someone. In ancient times, the infantry was so-called because it was comprised of children (long before Sierra Leone) who were sent in as the first wave as they were considered expendible. Have we really moved on, how many businesses still see young people as cheap expendible labour? We need to encourage young people towards employment, trades and skills. If we don't as science tells us, energy is not lost it is just transferred. Where will this youthful energy go?