Recruitment market collapse confirmed as record number of firms go bust

The number of recruitment agencies and business services firms going bust has rocketed over the last year, new figures have revealed.

Business consultancy Deloitte analysed administration figures for the past three months, which highlighted a 12% increase in the number of firms going bankrupt across all sectors from 631 between April and June 2008, to 707 between July and September.

The recruitment and business services sector saw the greatest increase in the number of bankruptcies compared to the same period last year – up 266%.

There were 25 new recruitment firms filing for administration in the third quarter of 2008, up from 15 the previous quarter. And the number of firms going bust in the professional services, advertising, support services and engineering sectors also jumped.

Lee Manning, reorganisation services partner at Deloitte, said: “It comes as no surprise that the volume of administrations is increasing: the economic situation is testing even the strongest of businesses, let alone those with weaker balance sheets.

“With businesses looking to streamline costs, there is less demand for temporary staff – reflected in the 67% increase in recruitment agencies falling into administration.”

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