There were more than 105,000 UK business closures in the first quarter of 2023, while just 79,000 new businesses were created, the largest net decrease on record.
The latest business demography data from the ONS showed that across the UK, business deaths (meaning businesses removed from the Inter-Departmental Business Register) outnumbered business births by 26,220 between January and March 2023. This is more than double the net decrease in the same period in 2022.
Business closures were up by 26% quarter on quarter, though 8% lower than the same period last year. The first quarters of 2023 and 2022 are the only times business closures have topped 100,000 since the record collection began in 2017.
Meanwhile, new businesses added to the IDBR were up slightly on last quarter, but 22% below last year’s level. Business closures have been outnumbering creations since the end of 2021, as business owners struggle with the rising costs of energy, as well as inflation in manufacturing, materials, transport and staff wages.
A recent analysis by the Federation of Small Businesses estimated that tens of thousands of firms might close down or have to radically restructure, due to being locked on to high fixed-rate energy bills in the latter half of last year. They estimate 13% of their members signed onto fixed rates on government guidance last year, when energy prices were at their peak, and now are struggling under impossible bills.
Outer London saw 11,380 business closures between January and March, 45% higher than the number in Q1 2019. Meanwhile, inner London saw just over 10,000 businesses close, 24% higher than pre-pandemic
Of the UK’s largest cities, West Yorkshire and West Midlands metropolitan counties have seen the biggest increase in business closures compared with before the pandemic, both up by more than half.
While London and Manchester businesses are seeing fewer closures than this time last year, Birmingham and Leeds have seen an increase year-on-year.
[Read more: Department stores continue to close up shop]