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Category: Business, Economics and Finance / Consumer Finance / Small Business

Personal insolvencies rise for the first time since the GFC

Thursday, 14 Jul 2016 10:56:58 | Stephen Letts

Many personal insolvencies are related to small business debts. (ABC News)

Personal insolvencies have risen for the first time since the GFC, according to data released by the Australian Financial Security Authority.

Personal insolvencies jumped by 4.4 per cent in the last year, the first increase reported since the 2009 financial year.

The big resources states Western Australia and Queensland were the main contributors, up 19.5 per cent and 9.3 per cent respectively.

Personal insolvencies also rose in Victoria, up 1.8 per cent, while the Northern Territory jumped 15.3 per cent.

The rises were partially offset by falls in New South Wales, Tasmania, the ACT and South Australia.

However, personal insolvencies rose in all states and territories in the June quarter compared to the same time last year.

The figures include bankruptcies, which also increased, up 0.2 per cent to 17,202 nationwide - the first rise since a spike in 2008 as the GFC hit its peak.

Debt agreements rose by 11.4 per cent to 12,150, which is the highest level on record.

The last time insolvencies were on the rise, not only was the world in the middle of a financial crisis, but Australian official interest rates had been as high as 7.25 per cent in August 2008, while the cash rate was stuck at 2 per cent for most of last financial year.

AFSA said economic conditions was cited as the most common business-related cause for insolvency, while loss of income and excessive use of credit were the main drivers in the non-business related sector.

AustraliaPlus


 

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