The number of business failures dropped in the last quarter of 2009, according to figures from the government's Insolvency Service.

In the fourth quarter, company administrations fell by 34 per cent to 849 compared with the same period in 2008, while liquidations dropped by 1 per cent to 4,566.

Malcolm Shierson, partner at accountancy firm Grant Thornton, says that the number of business failures is still 'near a historic high'. He also expects the number of liquidations to shoot up when the government stops extending the Time To Pay scheme, which gives struggling firms breathing space on tax demands.

Adds Shierson: 'There is no light at the end of the tunnel for troubled companies that are relying on a fast economic recovery to help them repair their balance sheets. Even though recent figures technically signal the end of the recession the growth was minimal and, so far, the recovery is too slow to reverse the damage.'