BBC News' Jonty Bloom: 21% increase in bankruptcies

The region worst hit by the economic slowdown was the East Midlands, where bankruptcies and liquidations rose by nearly 62% to 735 firms.

However, in absolute figures it was the South East that saw the largest number of companies fail - 2,085 in all, an increase of 14.4%.

The South West of England and Wales experienced a 40% increase, with respectively 1,365 and 444 companies going out of business.

Phillip Mellor of Dun and Bradstreet analyses the figures

London was the only region where the trend was looking up. Some 1,540 companies went down the drain, 9.8% less than in the same quarter of 1998.

Philip Mellor, senior analyst at Dun & Bradstreet, said: "The sudden increase in failures is a reflection of the slowdown in the economy and a cause for concern."

However, he stressed that the current rate of business failures was still much lower than during the early 1990s, when the country was in recession.

In the first three months of 1999 the whole of England and Wales saw just under 10,000 businesses fail. This figure includes both companies going bankrupt and those that were liquidated - where a company stops trading its assets are sold off.

In Scotland another 1,113 companies went bust, although the numbers are not strictly comparable because of differences in the bankruptcy law.