Debt help need may rise as economy contracts

More Britons could be left needing debt help if unemployment is sent spiralling upwards by a new recession, something it appears Britain may be enteri…

More Britons could be left needing debt help if unemployment is sent spiralling upwards by a new recession, something it appears Britain may be entering.

Official figures from the Office for National Statistics have shown the UK was initially estimated to have seen its economy contract by 0.2 per cent in the final three months of 2011, which if followed by any shrinkage in the first three months of this year will mean the country is officially back in recession.

Production fell by 1.2 per cent and construction by 0.5 per cent, in contrast with increases of 0.2 per cent and 0.3 per cent in the third quarter, while service sector output was unchanged.

If Britain is sliding back into a downturn, it could mean significant job losses, not east in the industrial and construction sectors.

Indeed, a report by PricewaterhouseCoopers (PwC) has revealed nearly 10,000 firms in these two sectors have become insolvent in the past two years, a tally it expects to rise because of the weak economic outlook.

Head of engineering and construction at PwC Jonathan Hook commented that "the trend shows no signs of abating" this year, with six per cent more construction firm failures in 2011 than 2010.

Those in debt who lose their job – either because their employer goes bankrupt or has to make cutbacks – may find they need additional help to tackle the situation.

A debt management plan may be one way forward, as it enables people to spread out repayments over a longer period.

By Joe White

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