Almost a quarter more UK businesses closed in the first three months of 2022 compared to the same period last year, raising concerns about the impact of the withdrawal of government support, of soaring costs and a slowing economy.
About 23% more businesses closed in the first quarter year-on-year – a total of 137,000 – data from the Office for National Statistics showed on Thursday.
This is the highest number since comparable data began in 2017 and the fourth consecutive quarter with more business closings than openings.
Businesses are grappling with the combination of slowing economic growth and soaring costs.
Prices for business inputs rose in March by an annual rate of 19%, according to separate data from the ONS, in the biggest monthly increase since records began 20 years ago.
Meanwhile, economic growth slowed in February as most government programs aimed at supporting workers and businesses against the impact of the pandemic came to an end.
Some shutdowns reversed strong business creation during the pandemic when Covid-19 restrictions on the entertainment and hospitality sectors encouraged many to start a business, especially in online retail.
The increase in closures in the first quarter affects almost all industry groups, but the transportation and warehousing industries, which saw a high number of new businesses created in 2020 and 2021, were the most affected.
Svend Pearce, founder of Watford-based accountant and small business accountant Bficient, said he was not surprised by the data “given the brutal economic conditions we find ourselves in”.
“We are seeing supply chains collapse in some industries, with suppliers going bankrupt due to rising logistics and transportation costs, rising fuel and utility costs, in addition to difficulty recruiting staff,” echoed Kevin Drew, managing director of Derby-based Ascentant Accountancy.