Deloitte, the business advisory firm, has today announced its analysis of administration figures for 2008. The results highlight a 20% increase in administrations in 2008 compared with 2007, and a quarterly increase of 30% in Q4 compared with on Q3 2008. Lee Manning, reorganisation services partner at Deloitte commented: “Given the current environment, these figures do not seem altogether too bad, but they do not reflect what is 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. This may require difficult decisions to be made over staffing and other overheads, and a curtailment of all non-essential expenditure. Things are going to become worse before they get better and this makes proper contingency planning vital.

“The property and construction sector continues to be hit hard, with administrations up 73% compared to 2007. The continual decline in house prices, land stock value and the diminishing numbers of mortgage approvals is exacerbating the situation.

“Elsewhere, the recruitment sector bore the brunt: administrations were up an astounding 232% compared to 2007, and up 208% on 2006. With the crisis no longer confined to the financial sector, individuals are feeling the effects of the credit crunch on a more personal level. Unsurprisingly, they don’t want to rock the boat and are preferring to stay with their existing employers rather than look elsewhere. This is coupled with a wholesale cutback on recruitment by companies.

“Interestingly, however, the leisure and hospitality sector only saw a rise of 16% in the number of companies falling into administration compared to 2007, and similarly retail saw an increase of just 6% compared with 2007. We have already begun to see signs of this changing, and as discretionary spending begins to be hit we expect to see these figures increase in the coming months.”