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Thursday, 16 September 2010

Public sector cuts likely to affect younger firms

Recent research by R3, the insolvency trade body, has caused quite a stir when they said that upto 150,000 businesses could become insolvent following public sector cuts. Most interestingly, is the observation that companies founded in the 90's and 2000's are most at risk. Whereas, older companies are more resilient. It isn't just the fact that older companies are generally wiser but they have not become too dependent on public sector work!

R3 have based their statistics on companies with a turnover £50,000 to £1m. Their research was conducted amongst 301 firms which were started in the 90s or 2000s, with over 33% stating that their business relied primarily on those public sector contracts.

So what next? Lets hope that HMRC will not want to see these businesses going into liquidation but would rather they restructured their debts and continue to trade. If your business is likely become insolvent then make sure your know your options.

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