Citibank warns personal insolvency rates set to soar

Personal insolvency rates will soar when the Insolvency Bill is passed and Ireland will slip back into recession, according to research by Citibank.

In a grim assessment of the economy entitled ‘Ireland: Tough times ahead’, Citi- bank analysts said: “In our view, it is likely that personal insolvencies in Ireland will soar in the next year or two, with more use of default as a means of deleveraging, especially since long- term unemployment (a key driver of debt service capacity) continues to rise in Ireland.”

Citibank based their assessment on what happened in Britain when they introduced similar changes to insolvencies 10 years ago. Despite strong economic growth, the number of insolvencies doubled between 2001 and 2006.