For the first time in 12 years, more businesses closed than opened

According to official data, for the first time in 12 years, more businesses are closing than opening.

The number of business closures jumped 5% year-over-year to 345,000 last year, pushing the so-called “business mortality rate” to a 12-year high.

According to the Office for National Statistics (ONS), >11.8% of all operating enterprises. The figure rose from 11.2% in 2021 and was the highest since 2009, when businesses were hit by the global financial crisis. Then the mortality rate was also 11.8%.

Transport and warehouse enterprises suffered the most: almost a quarter (23.8%) of all companies in the sector closed. 13.6% of tech businesses have closed as rising interest rates have made it harder for many startups to raise money.

The number of new businesses created fell 7% to 337,000 last year, meaning more businesses were closed. what they were created with. This is the first time this has happened since 2010.

Business birth rates in 2022 matched the lowest levels seen in 2020, as the country battled the worst of the pandemic and successive lockdowns. Before 2020, the last time the birth rate was this low was 2012, during the eurozone debt crisis and the fallout from the global financial crisis.

Soaring energy prices last year meant this was the last time businesses were hit by high energy bills. This year, high inflation has hit consumer spending and depressed sales at many companies.

At the same time, many businesses have been forced to raise wages to attract workers in a tight labor market.

The cumulative increase in costs in the face of reduced demand has proven too much for many businesses.

This year the problems remain. Although energy costs have fallen, the Bank of England has raised interest rates to 5.25%, meaning debt servicing costs have risen sharply.

In some sectors, high interest rates have also weighed on consumer demand. Homebuilders, for example, have been hit by a drop in demand for new homes following a surge in mortgage rates.

In April this year, the government also increased the general corporate tax rate from 19% to 25%.