The total number of companies falling into administration in 2010 declined 35% from 3,188 in 2009 to 2,086, according to research by Deloitte, the business advisory firm.

The last quarter of 2010 saw a decline of 6% on the previous quarter, with a total of 438 companies falling into administration compared with 467 in Q310.

Lee Manning, reorganisation services partner at Deloitte commented: "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."

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The property and construction sector bore the brunt of the economic downturn in 2010, with 453 companies going insolvent. However, this is a significant decline of 34% from 2009 when 683 companies in this sector went into administration.

"Risk of insolvency plays a big part in the property and construction industry because of its heavy reliance on supply chain relationships. Whilst many of the smaller property and construction firms would have been affected in 2008 during the early stages of the downturn, the sector still remains the largest to be hit by the market slow down, accounting for one in five administrations in 2010."

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

(CD)