Debt worries: Insolvencies hit record high in 2010

The 0.7 per cent rise on 2009's figure came despite a 13.6 per cent drop year-on-year in individual insolvencies during the final three months of the period as the number of people struggling financially continues to improve. The number of personal bankruptcies was at its lowest level for more than five years in the three months to December 31.

This was down 29.2 per cent on a year earlier and was the lowest since the first quarter of 2005.

The figures also showed further improvements in company liquidations across England and Wales, which fell 15.9 per cent in 2010 to 16,045.

But in a worrying sign for UK businesses, company administrations rose quarter on quarter for the first time since the height of the financial crisis.

Debt charity the Consumer Credit Counselling Service (CCCS) also warned that the squeeze on household income this year from tax hikes, spending cuts and soaring inflation was likely to push personal insolvencies higher in 2011.