According to figures from the Insolvency Service, liquidations in the third quarter of 2010 dropped below 4,000 for the first time since early 2008, while administrations are now below 700 when they were nearing 1,000 during some quarters in 2009.

It continues a pattern which has seen quarterly insolvencies dropping almost without exception since hitting a peak of around 5,000 in the first quarter of 2009.

However, R3 said that usually in the aftermath of a recession insolvencies rise. According to the organisation current fiscal and monetary policies such as Time to Pay agreements and low interest rates, coupled with a more supportive attitude from the banks, has kept numbers down.

R3 president Steven Law said: "These factors cannot remain with us forever, and we could be benefiting from the calm before the storm.

"One in five businesses are worried about their current debt levels and should servicing debt become more expensive, this could trigger more corporate insolvencies.

"UK insolvency practitioners are predicting an increase in corporate insolvency numbers next year to 27,500 insolvencies; in 2009 the figure was 26,400, while nearly 400,000 businesses have relied upon on delaying outstanding payments to the crown and we should not assume 2011 will automatically be smooth sailing."

According to the latest figures, there were 3,974 liquidations in the third quarter of 2010, compared to 4,063 in the previous quarter and 4,615 in the same period last year.

Administrations were also down to 633 from 777 in the second quarter of 2010 and 974 in the third quarter of 2009.