Unemployment Rises and the Nature of Debt: The Insolvency See-Saw

The Office for National Statistics have released fresh statistics today documenting that the rise in the figures of unemployed individuals has declined in speed. In addition, the information also details that, despite this continued increase in unemployment, the rate at which it is being experienced has significantly slowed. While it can be understood that the rate of individuals declaring themselves unemployed has continued without change, the rate of joblessness amidst youth has this year reached 19.8 per cent, setting a record high.

How should these statistics be interpreted given the current economic situation and what is the nature of these figures' relationship with their counterpart consumer credit and personal finance markets? David Brown investigates the statistics released by the ONS and comments upon the impact of financial issues that are likely to arise as a consequence of increasing joblessness.

Data included in the report published by the Office for National Statistics has already established its purpose in analytic areas inasmuch as select analysts are declaring the anticipated recovery from the economic disorder of the recession as now clearly imminent. The statistics derived from quarter three of 2009 display evidence detailing that the increase in unemployment was the most stunted rise since May, 2009.

Though surprising, this news can be taken to offer an optimistic vision of the economy and its speculated impending recovery and upon closer inspection of the figures published by the ONS, it is fair to assert that the general health of the economy is still fundamentally influenced by the levels of employment. Unemployment figures are not only crucial in gauging an economy by, in addition they provide a fundamental yardstick by which to measure the strength of personal finance markets.

Besides the damning reflection on the state of the economy, the most concerning data contained in the ONS report is that incidences of unemployment are becoming statistically more protracted. The figures detail that individuals experiencing joblessness for periods of time surpassing twelve months has risen by 547,000 to its highest level in twelve years: approximately 618,000 individuals have been unemployed for over a year.

This is a particularly concerning set of statistics for experts within the personal finance sector as the UK are typically an economy whereby financial commitments are taken on under joint responsibility, often in a marital partnership. In this situation, it is obvious that in the instance of one income being lost, household expenditures such as a mortgage repayments and utility expenses are still required to be covered. It is common for long-term unemployment to cause debt, requiring professional financial assistance and, in serious cases, the need to investigate the options of Individual Voluntary Arrangements (IVAs) or debt consolidation.

Furthermore, levels of joblessness in youth, being determined as individuals between 16 and 25 years of age, are statistically the highest of all age groups at instances of unemployment exceeding 943,000. In the context of a study undertaken by Moneysupermarket whereby results documented that this age group are least likely to consciously attempt to repay any debts amassed on facilities of consumer credit, such as credit cards, this figure is concerning both in the present and in terms of the future health of the personal finance sector.

Despite the initial reflection upon figures provided by the Office of National Statistics, it remains that the personal finance sector is intrinsically linked to the levels of employment and unemployment. Given the continued and predicted increases in the instances of protracted joblessness, the figures support assertions that there will be a marked increase in the requirement for serious debt solutions such as IVAs, joint IVAs, debt consolidation and in extreme cases, bankruptcy.

This article was composed by David Brown for IVA.net - a website providing free and non-obligatory IVA advice information, tools and guides on instances of financial difficulty and debt.