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NUMBER OF RECRUITMENT COMPANIES IN CRITICAL FINANCIAL

NUMBER OF RECRUITMENT COMPANIES IN CRITICAL FINANCIAL
DIFFICULTY INCREASES 129 PER CENT YEAR ON YEAR

Red Flag Alert is a quarterly monitor of early warning signs of company distress by Begbies Traynor, the UKs leading business rescue, recovery and restructuring specialist. The latest report focussing on Q2 2009 released today contains the following headlines in relation to the Recruitment sector:

Year on year, Q2 2009 shows a 90 per cent increase in the number of recruitment companies showing Significant financial distress compared to Q2 2008
Quarter on quarter, Q2 shows a 67 per cent increase in companies in the Recruitment sector with Critical problems against Q1 2009
Recruitment companies with Significant problems have increased by 32% quarter on quarter.

Red Flag Alert looks at information daily and makes quarter on quarter and on year on year comparisons of detrimental data, categorised as either significant or critical. The experience of Begbies Traynor is that a significant number of those companies with such financial problems tend subsequently TO enter into a formal insolvency procedure within a year.

Nick Hood, Partner, Begbies Traynor, commented: Recruitment companies serving all levels of the job market are now starting to feel the severity of the economic downturn and as we approach the seasonally quieter summer period, this may be the tolling bell for severely struggling companies. Over the medium term, the situation will only worsen as unemployment is a lagging indicator and its full effects are not going to be seen until even later in the recession.

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