Unemployment to add weight to the debt mountain?

With unemployment rising and showing no signs just yet of calming and the Consumer Credit Counselling Service reiterating that a quarter of those seeking its support in 2010 were out of work it doesn’t bode well for the governments outlook into 2011.

It is difficult to see how (when the economy is so fragile) that by making such savage and rapid cuts to public services, hiking VAT that the Government expects the private sector to ‘pick up the slack’, but then close down all the business support agencies and slash funding to those not being disbanded?

Of the figures released by CCCS for 2010 it said that the average ‘unemployed’ claimant seeking help from the debt advisory service owed nearly £16,000 and that debts were further compounded as those previous in work who fell unemployed often had to resort to borrowing more money and spinning out more and more creditors just to put food on the table due to the shortfall in household income. As such, many people not in work felt they had “no option” but to get into debt.

With some 8% of the overall workforce thought to be out of work and the government cuts, VAT hike and business support ending, all yet to take shape it seems almost inevitable that 2011 will see more business failures, increased commercial debt and household debt which when higher fuel and commodities costs are factored in, paint a very bleak picture.

Perhaps the Mayan’s got it wrong and 2011 is the end of civilisation, not 2012.

Whilst debt recovery firms are seemingly the only people seeing growth in their industry, and with commercial late payments and debtors days creeping up, the knock on effect is that if small firms don’t get their invoices paid they will more than often not be able to weather the storm as a blue chip would.

If you are a UK or EuroZone business and worried about your customers not paying, speak to Corporate Credit Debt Recovery for details on preventive services such as outsourced credit control to the reactionary services of debt collection and debt recovery services. Make sure you have suitable protection for your cash flow and lessen the impact of late payments and bad debt.

Corporate Credit Debt Recovery, The Liverpool Debt Recovery specialist working for clients ranging from start-ups and SME’s to multinational enterprises.

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