by Calculated Risk on 8/05/2005 09:56:00 PM

The Guardian reports:

The number of personal insolvencies in England and Wales has risen to its highest level in 45 years, official figures showed today.

I wonder if this is related to the housing slowdown? The article provides these statistics:

In the April to June period, the number of personal insolvencies rose to 15,394, the highest since comparable records began in 1960, the Department of Trade and Industry said.

That was up 36.8% compared to a year ago and 11.7% on the quarter. The insolvencies were made up of 11,195 bankruptcies - also the highest on record - and 4,199 individual voluntary arrangements.
...
The main British banks have all reported a rise in bad loans as more people have fallen into arrears with their loan and credit card payments. Barclays today said provisions for bad loans and other credit provisions rose 20% to £706m in the first quarter, although Barclays said the rise at its Barclaycard credit card unit was partly due to an increase in lending.

John Butler of HSBC cautions about a change in the bankruptcy laws, but notes Scotland didn't change their rules and is seeing a similar trend. Butler added:

"The worrying element is that at a time of high employment and low interest rates insolvencies have been rising," Mr Butler said.

I found these comments interesting:

"The recent overall signs that the labour market has started to soften means that there is a growing risk that individual insolvencies will climb markedly further over the coming months," said Howard Archer of the consultancy Global Insight.

"While Thursday's cut in interest rates will provide some very modest relief to debtors, there is the danger that it could encourage people to borrow more," Mr Archer said. "This is something the Bank of England will need to keep a close eye on."

Usually rate cuts are intended to encourage more borrowing. It sounds like Archer is arguing this cut was intended to provide "relief" to overextended borrowers. Wouldn't that require more stringent lending guidelines in conjunction with the rate cut?