Official data shows that for the first 12 years, more businesses are closing than opening.
The number of companies closing their doors increased by 5pc on an annual basis to 345,000 in the last year. This is a record high for “business death rates”.
According to the Office for National Statistics, 11.8pc (of all active businesses) closed in 2022. This rate is up from the 11.2pc of 2021, and it’s the highest since 2009. The global financial crisis had a major impact on businesses in 2009 when the rate reached its peak. The death rate then was 11.8pc.
Nearly a quarter of transport and storage companies (23,8pc) closed their doors. increasing interest rates caused 13.6pc tech businesses to close down.
Last year, the number of new businesses fell by 7pc and reached 337,000. This means that more businesses closed than were opened. This was the first time since 2010 that this had happened.
Business birth rates in 2022 will be the same as the lowest levels seen in 2020 when the nation was still dealing with the worst pandemic and the subsequent lockdowns. The last time that the birth rate had been so low before 2020 was in 2012, during the eurozone debt crises and after the global financial crisis.
The soaring energy prices meant that businesses had to pay high electricity bills in the past year. At the same time, high inflation affected consumer spending which led to a slowdown in sales.
Many businesses had to raise their wages in order to attract employees on a tight labor market.
Many businesses found the combined cost increase at a time when demand was slashed too much.
The challenges have not changed this year. The cost of debt servicing has risen as the Bank of England increased interest rates from 5.25pc to 5.25pc.
High interest rates have also affected customer demand in some sectors. The demand for new houses has plummeted after massive increases in mortgage rates.
The government raised the top rate of corporation tax from 19pc in April to 25pc.