Analysts predict the figures from the Government's Insolvency Service will show a 10 per cent rise between July and September compared with the previous quarter.

Around 27,000 people are thought to have entered various forms of insolvency agreement in that period including an estimated 17,000 declared bankrupt, according to predictions by accountants KPMG.

Another 10,000 are thought to have taken out an Individual Voluntary Arrangement (IVA), under which interest on debt is frozen in exchange for a set repayments.

It is powerful evidence of the financial crisis spreading from banks and City institutions to the so-called real economy.

By the end of the year as many as 110,000 people are expected to have declared themselves insolvent with a further dramatic rise after Christmas.

"During 2009, we think this figure is likely to dramatically increase to 150,000, as factors such as rising unemployment also start to take hold," Mark Sands, director of personal insolvency at KPMG, warned.

Meanwhile the number of business failures in Britain has risen by 40 per cent in a year with the insolvency rate in the property market almost tripling, according to separate estimates from PricewaterhouseCoopers.

The number of companies going into administration, receivership or liquidation is already thought to have reached levels not seen since the downturn in the "dotcom" industry at the start of the current decade but the situation is expected to worsen markedly in the coming months.

A total of 4,039 businesses in England and Wales entered various forms of insolvency in July, August and September of this year, a rise of 40 per cent on the same period last year and up 20 per cent on the previous quarter, PWC found.

In the property sector some 263 businesses faced collapse during that period, up 287 per cent on the same quarter last year, reflecting the sharp downturn in property prices and the effects of the credit squeeze on those trying to get a mortgage.

Barry Gilbertson, a partner in the PWC property team, said that a spike in property insolvencies in June shortly after the time when quarterly rents tend to fall due, suggests that landlords have been going out of business because their tenants can no longer pay their rent.

It was a similar pictures in hospitality and leisure where 234 companies entered insolvency, an annual increase of 55 per cent.

And while insolvency rates among retailers were at similar levels to the previous quarter of the year, it is expected to rise sharply after the Christmas sales period.

But manufacturing fared far better with failure rates at a five-year low thanks to the weakness of the pound against the euro and US dollar, making British exports cheaper.

Mike Jervis, a business recovery specialist at PWC, said that many companies may be opting to go into administration as a tactic to avoid complete collapse.

"Despite grabbing the headlines on an almost daily basis over the last quarter, insolvency is not necessarily viewed as a death sentence any more and businesses are seeing that insolvency techniques can be used as a mechanism to salvage and revitalise ailing operations," he said.


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