The number of recruiters in ‘critical’ financial difficulty has more than doubled in the past year, according to new research.

The research by business rescue, recovery and restructuring firm Begbies Traynor found:

• the number of recruiters with ‘critical’ financial problems rose from 24 in Q2 to 55 in Q2 of 2009, a 129% increase

• there was a 90% increase in the number of recruiters showing ‘significant’ financial distress in Q2 compared to Q2 in 2008

• a 67% increase in the number of recruiters with ‘critical’ problems in Q2 compared with Q1

Begbies Traynor defines companies with ‘significant’ problems as those with either a court action and/or average, poor or very poor insolvent or out-of-date accounts.

Companies with ‘critical’ problems are those with County Court Judgements totalling £5,000 or more and/or wind-up petition related claims.

Nick Hood, partner, Begbies Traynor, says: “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.”