The number of young people going bankrupt has increased 10-fold in three years as rising self-employment and the “temptation” of easily-obtainable credit cards have pushed Generation Z into debt.
Almost 2,000 18-to-25 year olds entered a formal insolvency procedure between April and June this year, compared to 208 at the beginning of 2016. The number has risen by about half in the past year.
Under-25s now make up 6.5pc of all personal insolvencies, up from 1pc three years ago, according to accountancy firm RSM based on data from the Insolvency Service.
Overall 31,000 people declared bankruptcy between April and June this year, an increase of 7pc on the same quarter last year although a slight drop compared to the start of 2019. This means 1 in 382 adults are bankrupt.
Alec Pillmoor, of RSM, said: “Of greatest concern is the rise in personal insolvencies among young adults.
“In this climate of low interest rates and relatively easy access to credit, it is entirely feasible that young people without financial experience or literacy may be more susceptible to the temptations of easy money.”
“We’ve also seen an increase in more flexible – but less secure – ways of working. The rise of the gig economy and zero-hours contracts have placed greater importance on the need to budget effectively. This could be proving a challenge for Generation Z.”