The number of companies falling into administration fell 35% in 2010 to 2,086, down from 3,188 in 2009, according to new research from Deloitte.
The last quarter of 2010 saw a decline of 6% on the previous quarter, with 438 businesses entering into administration compared with 467 in Q3.

Deloitte reorganisation services partner Lee Manning said: "Whilst 2010 administration statistics may have improved, the reality is that many companies are still walking a tight rope. A large number of struggling companies were able to stay afloat because of low interest rates, a lenient approach by lenders and HMRC's favourable Time to Pay scheme. However, the rapidly changing economic environment will no longer make this sustainable."

According to the report, the property and construction sector bore the brunt of the economic downturn last year, with 453 companies going insolvent. However, this is a significant decline of 34% from 2009, when 683 companies went into administration.

The retail industry showed healthy signs of resurgence in 2010, with a 43% decline in administrations to 165, compared with 290 in 2009.

Mr Manning added: "Whilst these figures will no doubt bring a glimmer of hope to the retail sector, we will undoubtedly see a growing number of retailers struggle to cope in the first few months of 2011 as they buckle under the pressure of Government spending cuts and the increase in VAT which will see consumers cut back on spending in an attempt to make ends meet."