* UK personal insolvencies rise by record amount in Q1
* Company liquidations up sharply on a year ago
* Analysts expect more of the same as recession drags on
(Adds comment, details)
By Matt Falloon
LONDON, May 1 (Reuters) - Nearly 5,000 firms in England and Wales went into liquidation and a record number of people succumbed to insolvency in the first three months of 2009, as the deepening recession claimed more victims.
There has been some very tentative survey evidence of an improvement in the economy following the sharpest drop in output since 1979 at the start of this year, but analysts say many more businesses and individuals are bound to go bust this year.
The Insolvency Service said on Friday there were a seasonally-adjusted 4,941 company liquidations in the first three months of the year, up 56 percent compared with the same period last year.
The service also reported a seasonally-adjusted 29,774 personal insolvencies, up 19 percent on year-ago levels and the highest since records began in 1960.
"Unfortunately we are seeing companies with nowhere else to go failing as their backers, realising that they are throwing good money after bad, snap the purse closed," said Richard Fleming, UK Head of Restructuring at KPMG.
"We expect to see the rate of insolvencies gathering pace over the coming months."
British businesses have been slashing jobs and scaling back production in an effort to survive the recession, but slumping demand and an ongoing credit crunch is still making it difficult to fund day-to-day activities and keep up with debt payments.
MORE TO COME
Britain's economy shrank a bigger than expected 1.9 percent in the first three months of this year and, although there have been a few encouraging signs since then, most analysts think the recession will drag on for the rest of the year and even beyond.
That prolonged contraction is likely to show up in insolvency and liquidation figures for many months to come.
"Deep and extended economic contraction, soaring unemployment, heightened debt levels, sharply reduced house prices and more and more people being trapped in negative equity seems certain to exact an increasing toll over the coming months," said Howard Archer, economist at IHS Global Insight.
"Credit conditions currently remain very tight and a number of essentially sound companies are still in grave danger of going under."
Within the overall figures, more than 19,000 people went bankrupt in the three months to the end of March -- just under a quarter more than last year. About 10,700 people agreed to pay off some of their debts under a voluntary arrangement.
(Editing by David Stamp/Victoria Main)