Pictured above: Paul Finnity
Derby based RSM Tenon has warned that the north-south divide
could deepen following public sector cuts - and the East Midlands
is a 'danger zone'.
Paul Finnity of RSM Tenon, director of the Derby office's
recovery and insolvency service line, said that year-on-year
increases in personal insolvencies are highest in the areas which
have the large percentage of employed people in the public
sector.
The East Midlands, which has seen a 17% year-on-year increase in
personal insolvencies, is in the danger-zone and is likely to
suffer insolvency casualties following the jobs losses, he said.
(see attached)
The knock on affect of the estimated 490,000 reduction in public
sector headcount, a proportion of which will arise from
redundancies, is likely to further increase personal insolvencies
which are already at record high levels, he added.
RSM Tenon's personal insolvency hotspot map identifies the
regions with the highest increases in personal insolvency and those
with the largest percentage of public sector workers.
The North West is already seeing the highest growth of personal
insolvencies, having suffered a 20% year-on-year increase.
Coupled with 20.8% of workers being employed by the public
sector, this could see the number of personal insolvencies in the
region skyrocket.
The map splits the country in two with areas in the south seeing
fewer personal insolvencies, lesser annual increases and a smaller
reliance on public sector jobs. The Spending Review is likely to
widen the north-south divide with more job losses in the north
while those in the south benefit from higher wages and property
prices.
Paul said: "There is no doubt in my mind that these spending
cuts will serve as a catalyst for further personal insolvency
rises. Thousands of people are on the brink of bankruptcy,
struggling to manage the debts they have built up over a number of
years. The new wave of job losses will remove the last barrier
towards the insolvency process for many living in the north
deepening the north-south divide."