The number of companies going bankrupt jumped sharply between July and September and is set to rise farther, experts said yesterday.

More than 4,000 companies went under in the three months to September 30 in England and Wales, 26 per cent more than in the same period last year, figures from the Insolvency Service show. This is the biggest increase since the final quarter of 1990.

Another 1,007 businesses went into administration, up 50 per cent from the same period last year. Almost double the number of real estate companies went into administration, while the increase for hotels, bars and restaurants was 86 per cent.

Experts said that many companies fell into difficulties after they were refused credit. Ken Baird, head of restructuring and insolvency at Freshfields, the law firm, said: “Banks have been so concerned about conserving cash that they have been either unwilling to lend or charging a higher rate for doing so.” Smaller companies had also been affected. “Two years ago, SMEs were seen as a profitable part of banks' business, now they are seen as carrying real risks.” he said. “The rise in companies going insolvent is a direct echo of the financial crisis.”

Nicholas Hood, partner at Begbies Traynor, the business recovery specialist, said that the problems would intensify. “It is inevitable that there will be a further rise in insolvencies, and banks will have a greater role in this as companies find it more difficult to renew and increase their borrowing facilities.”

There was a more modest rise in the number of individuals becoming insolvent in England and Wales, a 4.8 per cent increase. A total of 17,341 people were made bankrupt, 9.5 per cent more than in the same period last year, while the number of people taking out individual voluntary arrangements, under which interest on debt is frozen in exchange for a set amount being repaid each month, fell by 3 per cent to 9,746.

Experts said the subdued rise could in part be attributed to an increasing number of people entering informal debt management plans, schemes orchestrated by the banks which don't show up in official insolvency statistics, in an attempt to avoid bankruptcy.

There was a sharp rise in the number of insolvencies in Scotland. Nearly 6,000 people became insolvent in the third quarter, up 70 per cent on the same period a year earlier. The number of personal insolvencies in Northern Ireland rose 14.2 per cent to 386.

Explore Economics

• Pre-Budget Report 2009

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive