Small businesses ‘could face insolvency threat next year’

Posted 20/10/2010

Public sector cuts could mean that nearly 150,000 small businesses face insolvency next year, it has been claimed.

Trade body R3 said that ten per cent of small firms fear they would be vulnerable if they lost supply contracts with the public sector, with 30 per cent saying they are reliant or very reliant on these deals.

Spokesperson Steve Law warned that 2010 could be the calm before the storm, with nearly half of insolvency practitioners expecting business failures to increase during 2011.

“The effect [of the government’s spending cuts] on the current levels of corporate insolvency is likely to be pronounced in any case, given that business failures ran to 26,000 for the whole of 2009,” he pointed out.

However, Mr Law added that companies who diversify their customer base may be better prepared to survive.

Meanwhile, the government’s Insolvency Service has released figures which show that personal insolvency has been badly affecting women in the 12 months to August 31st 2010.

Some 65,000 were declared insolvent during this period, three times the rate of men and an increase of 22 per cent.