More than 60 businesses went bust every day during the last quarter – the highest amount since 2009, according to figures released today by RSM Tenon.
Some 5600 companies – a 5% rise on Q4 2011 – became insolvent during Q1 2012.
About 25% of total insolvencies were due to failures in the business service sector.
Equipment and maintenance suppliers, IT consultancies, design agencies and PR agencies were reported as the biggest sufferers.
Carl Jackson, head of recovery at RSM Tenon, said the economy has hit “a period of stagnation”.
He said: “The businesses who supply and support the businesses that will help us get out of the current recession are hitting the buffers and therefore proves we have hit a period of stagnation as the competitive nature of this market takes hold.”
Meanwhile, the construction, hospitality, tourism and retail also recorded a high number of insolvencies.
In particular, the construction and property service sector represented 17% and 7% of total insolvencies.
Jackson added: “The effects of the public spending cuts are still clearly apparent as contracts are being held or even shelved.”
Retail insolvencies rose by 26% on the previous quarter while hospitality and tourism failures also recorded an 18% rise on Q4 2011.