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Steven Law, R3 President (insolvency trade body) comments ahead of comprehensive spending review:

“30% of small businesses say they are "very reliant" or "fairly reliant" on public sector contracts and 10% of all small businesses say they would become insolvent if they no longer had supply contracts to the public sector. We calculate that 148,000 small businesses are at risk of failure, but of course not all businesses will lose all of their public sector work. The effect on the current levels of corporate insolvency is likely to be pronounced in any case - given that business failures ran to 26,000 for the whole of 2009.

Our members predict that 2011 will be a difficult year for small businesses and factors such as loss of public sector work will see company insolvency numbers start to rise, potentially making 2010 the year of the calm before the storm. Although numbers have decreased over the course of this year, insolvency practitioners are expecting 27,540 corporate insolvencies in 2011. The same survey found that almost half (45%) of the UK’s practitioners expecting corporate insolvencies to peak in 2011. Businesses with a diversified customer base will clearly be better able to weather the storm.”

Steven Law, President of R3, insolvency trade body

Public Sector Cuts Pushing Small Businesses into Insolvency?

R3 Press Office

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.