The survey, by business information company Dun & Bradstreet, shows a 6.2% increase in failed companies since last year - it is the first annual increase in business failure since the 1992 recession. Almost 200 more businesses are going under each month than at the same time last year.

This year, a total of 38,634 businesses went bust - an increase of 2,266 from 1997. The figure for England and Wales of 34,636 failed businesses has trebled since Dun & Bradstreet first kept statistics in 1980.

Largest fall hardest

In the first three months of 1998 business failures actually dropped by 12%. But they rose by 4% in the second quarter, then 17.9% in the third quarter and then by 18.6% in the last three months.

The strong pound and the global economic turmoil have undermined businesses

The strength of sterling and the slowdown in the world's economy have been blamed for the effects. But it is larger companies which have been the worst hit, with 16,956 company liquidations in 1998 compared with 15,470 in 1997 - an increase of nearly 10%. The increase in smaller business failures was up 3.7% to 21,678.

The current rate of failures is well below 1992. Then, with the UK in full recession, 62,767 failures were recorded, almost twice the current level.

Short-lived downturn

Both Dun & Bradstreet and the Confederation of British Industry (CBI) said that the present trend would only last for a short while - possibly only for the first six months of next year.