Business failure rates were among the worst in the country at the end of last year, figures show.

The number of Leicester businesses going bust increased by almost 50 per cent in the last three months of 2008.

According to Experian, 102 Leicester companies failed after October 1 – up from 69 in 2007.

This made Leicester the 10th worst hit city in the country, with Nottingham at number eight and London top.

Firms in the county also suffered in the same period, with 180 lost, compared with 120 in 2007.

Tyrone Courtman, insolvency specialist at Cooper Parry, in Leicester, said: "This is the tip of the iceberg.

"It is recognised we are in a recession but in my view it is now much more like a depression. It is getting worse."

Mr Courtman said companies faced a "vicious cycle" because businesses needed more money as sales dropped through the floor, but banks did not want to lend as an increasing number of businesses became less viable.

Steve Goodman, chairman of the Leicestershire branch of the Confederation of British Industry, said the sharp rise in insolvencies was partly down to the high proportion of small firms in the county.

He said: "Small firms tend to become more vulnerable during a downturn.

"However, the insolvency figures are still small when you look at them in proportion to the tens of thousands of businesses in the county."

In total during 2008 nearly 1,000 city and county firms went into administration compared with about 700 in 2007.

Leicester's last major footwear factory, Equity Shoes, axed 98 jobs after going into liquidation last month.

Woodwork machine manufacturer Wadkin, in Bardon, near Coalville, was saved after being bought by its management. Printing firm Impress (Leicester), in Morris Road, collapsed with the loss of 34 jobs in November, while building firm Stapletons UK, of Queniborough, made all 15 workers redundant.

Thirty jobs at art and craft firm Calder Colours, of Ashby, were saved after it was bought out of administration.