The number of individual insolvencies rose to 27,087 in England and Wales in the third quarter - an 8.8 per cent increase on the previous three months and 4.6 per cent more than during the same period a year earlier, according to the Insolvency Service.

At the same time, the number of companies put into administration rose by more than 50 per cent year-on-year to 1,007 in the three months to the end of September.

Financial experts warned the rise is just the beginning, with worse figures expected next year as the looming recession unfolds.

Howard Archer, chief UK and European economist at IHS Global Insight, said: "There can be little doubt that the marked rise in the number of individual insolvencies in the third quarter is only the beginning of the storm."

Vicky Redwood, an economist at Capital Economics said: "With the full effects of the credit crunch and rising unemployment yet to be felt, bankruptcies are set to soar over the coming two or three years."

And Catherine Matthews, partner at licensed insolvency practitioners, Tomlinsons, said: "The latest insolvency statistics, up nearly 9 per cent on the last quarter, are grim indeed and confirm what we already knew: more and more people are struggling at the moment and getting into real financial difficulty.

"Unfortunately, I expect the rise in personal insolvencies to continue into 2009 as the recession spreads from the banking and property sectors into the broader economy.

"We're already seeing signs of this and urge people to take action as soon as possible if they are starting to struggle. The worst thing to do is stick your head in the sand and hope it will go away."


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