The negative feelings people may derive from being in debt could contribute to their broadly pessimistic view of the state of the UK economy, which was indicated in a new poll.

Ipsos Mori surveyed consumers in 24 nations about the state of their nations' finances and in the British case, only 13 per cent said the economy is in a "good" state.

This made Britain the sixth worst in terms of public perceptions, with the five countries below it being France on 12 per cent, Italy at ten per cent, Japan on eight per cent and Hungary and Spain bottom of the pile at six per cent each.

Not every country has such a pessimistic outlook, with some nations being made up mostly of people whose view of their economic prospects is a positive one.

This includes 76 per cent of Swedes, 69 per cent of Canadians and 68 per cent of Germans.

An Ipsos Mori spokesman said: "In the wake of the debt crisis, it's no surprise that the British public remain among the most negative worldwide, along with a group of major European countries including Spain, Italy and France.

"Coupled with the cost of living increasing rapidly in comparison to earnings, it's not a shock that confidence isn't improving."

Those whose pessimism is linked to being in severe debt may find an IVA the best solution, as it can reduce the amount they have to repay each month and ensure they are debt free in five years or less.

Commenting on the UK government's economic growth strategy last week, senior economic advisor to the Ernst & Young ITEM Club Andrew Goodwin said it will be "several years" before it becomes clear how well – or not – it will have worked.

By Joe White
 

The number of individual voluntary arrangements (IVAs) and other forms of insolvency only dipped by a little in the three months to May 2011, the Bank of England said.

In its latest quarterly Trends in Lending report, the Bank stated: "The write-off rate on consumer credit fell in 2011 Q1 for the third consecutive quarter, though remained high
and the rate of personal insolvencies in England and Wales fell slightly, following a sharp fall in the previous quarter."

It added: "Some major UK lenders reported that these indicators had moved broadly in line with their expectations and expected them to be stable for the rest of the year."

What this means is that there is still a substantial amount of money being written off by lenders and while the overall numbers may have dipped, many of these instances might have arisen from personal insolvencies.

For those seeking IVAs, the way this can reduce the amount owed is through a deal that sees creditors accepting smaller repayments, with interest frozen and everything remaining being written off at the end of the IVA payments period, which can be no more than five years.

For this to be established, it needs three quarters of those owed money to agree to the proposed deal.

Instances of money being written off include many bank loans, with figures from Credit Action for June showing £20.71 million is written off by banks and building societies from these every day.

This added up to £9.5 billion in the 12 months to the end of the first quarter of 2011.

By James Francis
 

The public sector is facing a major squeeze on employment and much uncertainty due to government spending cuts, a recruitment expert has said.

Chief executive of the Recruitment and Employment Confederation Kevin Green stated: "This is having a huge impact on the consumer and the jobs market. The consumer – because 20 per cent of all people in the UK work in the public sector – obviously has huge concerns about job security."

Problems like pay and the squeeze on pensions can be added to this, he noted.

Mr Green noted this means there is "little fluidity" in the public sector jobs market, but for those already there and worried about their jobs, the issue of being able to pay off debts may also be of concern.

While there may be some state employees who are not in debt or owe little, many will have mortgages and could be carrying large balances on overdrafts, or be paying off loans and facing significant credit card debt levels.

For those owing £15,000 or more and struggling to pay the interest, an individual voluntary arrangement may be the answer and this could be particularly so for some public sector workers.

Those who are facing a pay freeze may find this to be the case because while their take-home pay stays the same, inflation is reducing its value and making the twin demands of interest payments and higher household bills harder to meet.

And for workers suffering redundancy, the consequences may be more immediate and severe.

Women may be most likely to fall into the second category, as the latest official figures on employment show females accounted for the bulk of the 144,000 redundancies in the three months to May, while more women are claiming jobseekers allowance than at any time since 1996.

By Joe White