With billions of pounds in Government contracts already cancelled or put on hold, the Government’s austerity measures are leading to a surge in corporate failures and job losses.

According to the accountancy firm Wilkins Kennedy, 168 businesses in the health and social services, education and defence sectors went bust in the first six months of 2010 versus 114 in the first half of 2009, an increase of 47 per cent in the last year.
 
Over the same period, corporate insolvencies as a whole have fallen by 5 per cent.  

Anthony Cork, Director at Wilkins Kennedy, commented:

“So far the impact of the Government’s austerity drive has been most visible in the slew of profit warnings from listed companies. However, for an increasing number of companies the situation is even worse and they are being forced into insolvency.
 
“Whilst 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.

“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. It is not just the actual cost cuts that are causing problems but the delay by public sector bodies making spending decisions.
 
“A lot of suppliers to the public sector are now waiting for the other shoe to drop. It seems inevitable that the Public Sector Spending Review in October is going to heap on more pain.”