Coastal cities have highest proportion of bankruptcies for two years running

08 October 2010

The saying goes that life's a beach, however a table of the top 50 bankruptcy hotspots in the UK has shown that the UK's coastal towns and cities have the highest proportion of personal bankruptcies for the second year in a row.

The table has been released by accounting firm Wilkins Kennedy this week and four out of the Top Five towns with the highest individual bankruptcy rates are former port towns or holiday resorts - Hull, Blackpool, Plymouth and Eastbourne.

Hull has the highest rate of new personal bankruptcies, with 51 new cases per 10,000 adults.  Hull's rate is more than twice that of London's (20 per 10,000). Blackpool came second with 49 per 10,000, followed by Plymouth (46) and Eastbourne (44).

Wilkins Kennedy points out that these results are particularly significant as Plymouth, Blackpool and Hull were also top of the list for personal bankruptcies in 2008. The 2009 figures, therefore, represent a whole new wave of residents being declared bankrupt.

Keith Stevens, Partner at Wilkins Kennedy, said that the recent trend of ‘staycations' has not bailed out the coastal economy.

He said: "You can look at the coastal economy through rose tinted glasses and imagine it is all like Rock, Padstow and Salcombe Bay but it's not.

"It is a worry that some of the coastal towns seem to have become production lines for personal bankruptcy.

"Even the banking crisis that might have made coastal towns look good compared to those areas that are more dependent on financial services centres like London, Manchester and Leeds hasn't!"

The UK average is 31 new bankruptcy cases per 10,000.

Mr Stevens added: "These coastal towns and cities economies have never fully recovered from their heyday, when the shipbuilding and commercial fishing industries were still thriving.

"Decades later and few of these towns have managed to properly replace those sunset industries and very few towns that depended on tourist spend have been able to develop a compelling alternative to cheap overseas travel."

The accountancy firm also explained that too many of these coastal towns also have a high proportion of their residents employed on a seasonal or part time basis. This means their earnings will be far more erratic than people who work full time.

Mr Stevens continued: "If you have to re-apply for the same job each year then that makes your personal finances inherently unstable. Banks will be reluctant to lend to you and when you can find funding it may be at a very high rate."  

Wilkins Kennedy has also highlighted that many of these coastal towns will have a higher than average proportion of pensioner households who, because of improved longevity, are more likely than ever to have spent their personal savings. More volatile energy, fuel and food prices over the last five years may have also pushed many further into debt.

Keith Stevens concluded: "With the abolition of RDAs, coastal towns will be worried over what kind of economic assistance they will get from central Government.

"It gets more difficult for these towns to break the cycle. The most ambitious and best educated individuals tend to move and in turn that makes it tougher to attract new businesses to these areas."