The number of companies entering insolvency has risen to the highest level for five years due to the ongoing credit crisis.

According to PricewaterhouseCoopers, in the first three months of 2008, 3,359 companies failed across the UK - a 21pc jump on the previous quarter and a 17pc increase on the same time last year.

The figures from the accountancy giant showed that the last time the number of businesses collapsed on such a huge scale was in the first quarter of 2003 - during the dotcom crisis.

Insolvency partner, Michael Jervis, said: "It is not good for the wider economy. There is very little to hang your hat on, but you do not see consumer-type conditions getting any better."

The data showed the retail and construction sectors were seeing more companies being put into administration, liquidation, receivership or seeking voluntary arrangements, with 431 and 500 insolvencies respectively.

Mid-sized retail stores have been badly hit. Well-known high street brands to fail in recent months have included discount clothing group Ethel Austin, footwear manufacturer Stead & Simpson, shoe shop Dolcis and book retailer The Works.

They have been badly affected by consumers tightening their belts due to higher costs of living and less credit being available, combined with the poor UK weather.

However, construction companies' ability to operate profitably, Mr Jervis said, have been hit by issues such as less available working capital.



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