More public sector suppliers going bust

The number of businesses supplying goods and services to the public sector going bust has risen by nearly half in the past year, according to research.

Accountancy firm Wilkins Kennedy says 168 businesses in the health and social services, education and defence sectors went bust in the first six months of 2010, compared to 114 in the first half of 2009 – a rise of 47 per cent.

The firm adds that corporate insolvencies as a whole have fallen by 5 per cent in the same period, and links the public sector failures to the Government’s austerity measures, which include a freeze on all ‘non-essential’ advertising and marketing spend.

Anthony Cork, director at Wilkins Kennedy, says, ‘While the real cost-cutting that this Government has threatened has yet to take place, we are already seeing a wide range of companies fail because of delayed contracts.’

He adds, ‘The public sector has seen tremendous growth over the past 15 years and the private-sector eco-system that surrounds it has expanded along with it. Supplying to the public sector has been seen as safe and steady – unfortunately that is no longer the case.

‘Those companies that have become too dependent on the public sector – be they in recruitment, outsourcing, construction or marketing services – are beginning to feel the pain.’

Last month Roger Proctor, chairman of the South West Design Forum, described the Government’s decision to freeze marketing spend as ‘the biggest threat to the design sector at the moment’, adding, ‘in the next few weeks we will see a number of redundancies’.

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