By Marcus Leach

Company insolvency figures are at a five year low, according to data released by the Insolvency Service.

The number of companies going bust in England and Wales has dropped to its lowest level since the end of 2007.

The official data shows that 986 firms went into administration, receivership or a company voluntary arrangement in the third quarter of this year. That was a 25% drop on the previous quarter.

However, personal insolvencies rose slightly, to 28,062, though that was still fewer than a year ago.

"Insolvency figures have a habit of striking a bum note, even amid a chorus of positive economic news," Nick O'Reilly, insolvency partner at the chartered accountants HW Fisher & Company, commented.

"But for once, this latest data is in tune with the economic growth and job creation seen in the third quarter.

"Total company liquidations have dropped to their lowest level for two years, hinting that as the recovery takes hold fewer businesses are going to the wall.

"But the numbers do not tell the full story. They fail to show the pressure which has built up in the system, as thousands of companies bump along the bottom, kept alive only by low interest rates, and frequently by their owners pumping personal savings into them.

"We're routinely seeing struggling companies taking on work at below cost, simply to keep the cash coming in. But this is only delaying the inevitable.

"Of course such unproductive and loss-making companies are dragging down the economy as a whole, and can only defy business gravity for so long.

"However there are signs that some of these zombie companies are finally being put out of their misery, as compulsory liquidations have risen since the last quarter."

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