Around 10% of employment agencies are heading for failure, according to a study by Plimsoll.

The research rates 192 agencies as being in danger. It says they are suffering from low and declining margins and uncontrolled rising debts.

David Patterson, senior analyst on the project, said: “At these high risk companies, the managers need to act quickly to get their firms back on a decent footing. It seems inevitable that we will see a period of consolidation. Personally I would not rule out a series of takeovers. Most of these companies are blissfully unaware of how exposed to acquisition they are.”

The report, a comprehensive guide to the financial health of employment agencies, looked at the UK’s top 2001 agencies.