Company insolvencies are forecast to rise sharply this year as the chill wind from the financial crisis hits businesses in the wider economy. Smaller companies are likely to suffer most because of a slowing economy and increasing costs to borrow in a deteriorating business environment following the credit squeeze.

Insolvencies are forecast to rise to 13,492 next year - an 8.3 per cent increase on this year - the highest annual rate since 2003, when the economy was suffering from the aftershocks of the dotcom crash, according to Euler Hermes, the world's leading insurer of credit taken on by companies.