Record Number of Businesses Close Across the UK – ONS
Official figures released by the Office for National Statistics (ONS) have revealed that a record number of businesses closed across the UK in 2022. The data shows that 345,000 firms shut their doors last year, marking a 5% increase from the previous year and the highest figure since records began in 2002.
The ONS data also highlights a significant shift in the balance between business closures and new startups. For the first time since 2010, the business death rate surpassed the rate of new businesses being founded in a given year. In 2022, there were 345,000 business closures compared to 337,000 new businesses starting up, a decline from the previous year’s figure of 364,000.
These statistics reflect the challenging environment faced by UK businesses as they navigated the aftermath of the pandemic and dealt with the economic fallout from Russia’s invasion of Ukraine. The transport and storage sector, in particular, experienced the highest death rate among industries, with 23.8% of businesses in this field closing their doors. This can be partly attributed to higher business costs and declining disposable income.
However, it’s not all bad news. The information and communication industry emerged as a positive outlier, boasting a higher percentage of high-growth businesses than any other sector. A high-growth business is defined as a firm that experiences an average annual growth in the number of employees exceeding 20% over a three-year period.
Regional variations were also observed in the data. London had the highest birth rate, with 12.7% of new businesses established in the capital. Meanwhile, the East Midlands recorded the highest death rate at 13.2%. Northern Ireland stood out as the most resilient region, with just 8.2% of businesses closing last year. Northern Ireland also had the highest proportion of businesses surviving five years, with a rate of 49%.
Commenting on the figures, Roger Barker, director of policy and corporate governance at the IoD, acknowledged the difficulties faced by UK businesses in 2022. He attributed the closures to higher business costs and a decline in disposable income. Barker emphasized the need for greater business support to sustain higher economic activity.
George Dibb, head of the Institute for Public Policy Research’s Centre for Economic Justice, added that the data could be a warning sign for the British economy, highlighting that more companies went out of business than started up for the first time since the financial crisis. Dibb suggested that fostering more high-growth companies in all regions of the country would be essential to reducing regional economic inequality and achieving a more balanced economic landscape.
The ONS data underscores the significant challenges faced by UK businesses in 2022 and the delicate balance between business closures and new startups. While the closures are concerning, the presence of high-growth businesses and regional variations offer hope for recovery and future economic growth.
As the UK continues to navigate the post-pandemic landscape, it becomes even more crucial to explore strategies and policies that provide support and foster resilience for businesses across all sectors and regions.
