Five thousand businesses hit by recession are expected to go bust this year, according to business experts.

KPMG Restructuring says insolvencies - administrations and receiverships - will rise dramatically in the UK in 2009.

It predicts that the total could go up from 3,225 in 2008 to around 5,000. The annual figure for 2007 was 2,230, rising by 45 per cent in 2008.

A review of media reports for KPMG in the final quarter of the year found a 79 per cent rise in debt restructurings and 64 per cent increase in cashflow warnings.

Other signs of looming financial problems were profit warnings, covenant breaches, redundancy announcements or surprise resignation of bosses.

Kris Carpen, restructuring manager with KPMG in Gatwick, the office that covers Kent and Medway, said: "The downturn is now firmly entrenched in the real economy and there are hardly any sectors that have not been hit.

"Confidence is a key driver behind consumers’ and business’ willingness to spend money, and right now confidence is at a low ebb. A number of companies and their stakeholders are trying hard to restructure their businesses, but given the speed of the downturn it is inevitable that some will run out of cash."

He said that retail insolvency appointments in January were 300 per cent up on the same time a year ago.

"With consumer confidence in decline, the soaring cost of imported goods or withdrawal of credit insurance and the overall lack of credit to bridge retailers to the next key trading period of Easter, means we would expect the tally of insolvencies on the High Street to continue to climb."

Mr Carpen added: "The increase in announced debt restructurings is only the visible tip of the covenant breach iceberg. As we go through 2009 we expect a very significant number of companies to be forced to renegotiate or restructure their facilities; we’re not expecting that process to be quick or easy. Those companies that delay approaching their creditors are at grave risk of failure.

"The most common cause of business collapse is simply running out of cash. Waiting until cash becomes the critical issue is a sure-fire way of destroying the confidence of lenders.

"Yet cashflow warnings remain a significant trigger for companies this year across sectors. Looking ahead, we believe the sectors with the most to lose in the months to come include travel and leisure, chemicals and industrials, including automotive, energy and natural resources."