There has been a 20% increase in UK administrations in 2008 compared with 2007, according to business advisory firm Deloitte.
The latest analysis of figures for last year revealed the recruitment sector bore the brunt of the downturn, with administrations up 232% compared to 2007.
The advisory firm’s figures show that there has been a quarterly increase of 30% in administrations in Q4 compared with Q3 2008. The increase in activity gathered pace towards the end of the year and Deloitte expects these figures to increase drastically.
The property and construction sector is continuing to be hit hard, with administrations up 73% from 2007. The massive slump is said to be due to a decline in house prices, land stock value and the diminishing numbers of mortgage approvals.
Elsewhere, the leisure and hospitality sector witnessed a slight increase in administrations, with 16% of companies falling into administration compared to 2007. Similarly, retail saw an increase of 6% compared to 2007. Although the leisure and retail sectors seem to be holding steady, Deloitte do not believe this will last.
Reorganisation services partner at Deloitte, Lee Manning, said: “Given the current environment these figures do not seem altogether bad, but they do not reflect what’s truly happening in the economy.
“Most of the increase in administration activity only gathered pace towards the end of last year, and with many economic commentators speculating that we are only at the tip of this crisis, we can expect these figures to increase drastically. Businesses should take this as a warning to act as early as possible to avoid becoming yet another statistic.”