The number of companies in administration jumped by 60% in the second quarter in a sign of deepening economic gloom, according to official figures published today.

Statistics from the Insolvency Service showed that 938 companies in England and Wales were in administration in the three months to the end of June - up from 585 in the same quarter last year. Today's figures bring the total in administration so far this year to 1,796 - up 42% on the first half of 2007.

The data also shows that the number of company liquidations rose 15.6% in the second quarter, to 3,689 - the highest quarterly figure in five years.

Individual insolvencies in England and Wales fell slightly in the second quarter of the year to 24,553, while the number of people declared bankrupt fell by 1.3% over the quarter to 15,297. This marks a 5.7% fall since the second quarter of 2007.

Howard Archer, chief economist at Global Insight, said UK firms were suffering in the face of a "toxic combination" of slowing demand, higher costs and tighter credit conditions. "Company liquidations seem certain to trend significantly higher over the coming months, given that recession is now looking more likely than not," he added.

The figures showed that the total number of corporate insolvencies, including liquidations, administrations and receiverships, rose by 11% year-on-year in the second quarter, according to PricewaterhouseCoopers.

Mike Jervis, PwC's partner in the business recovery services practice, said this rise was comparative with increases in insolvencies seen during times of recession.

"There are significantly more companies in distress now - last month was the busiest July we have seen for many years," he said.

Retail, construction, property and leisure were among the worst affected sectors in the face of a slowdown in consumer spending and housing market downturn. Manufacturers also suffered, with 157 in administration over the quarter.

A raft of retail brands have collapsed this year as the consumer belt tightening has taken its toll. Companies that rely on people moving homes have been particularly badly hit. The Liverpool-based discount retailer Ethel Austin went into administration in April and Britain's biggest wood and laminates flooring retailer, Floors-2-Go, called in administrators last week.



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