Official figures show that there has been a record number of businesses close across the UK in 2022.
The data from the Office for National Statistics (ONS) warns that the death rate of businesses has now surpassed the “birth rate” of new companies opening.
ONS data shows that 345,000 business in the UK closed in 2022 which is a 5% increase from 2021 which saw 328,000 collapse.
This is the highest figure since records began and nationwide 337,000 new businesses started to trade in 2022, this is down from 364,000 the previous year.
The Institute of Directors (IoD) said the increase is a result of the fallout of the Russia-Ukraine war, the pandemic and the cost of living crisis.
The “birth rate” of new businesses dropped from 12.4% to 11.5%, this means this is the first year in 13-years that more companies collapsed than started.
In 2022 there was a total of 2.2 million active companies, this means the “death rate” of businesses which collapsed climbed 11.8%.
Roger Barker, director of policy and corporate governance at the IoD, said: “2022 was a difficult year for UK businesses, as they emerged out of the restrictions of the pandemic and straight into the economic fallout from Russia’s invasion of Ukraine.”
George Dibb, head of the Institute for Public Policy Research’s Centre for Economic Justice, said the data was a “potential warning sign for the British economy with more companies going out of business than started up for the first time in 2022 since the tail end of the financial crisis”.
“Whilst this isn’t unexpected – high energy costs combined with the end of pandemic support schemes would always see a rise in company closures – it might signify that greater business support would have maintained higher economic activity.”
He added: “The only regions with above average high-growth firms are London and the South East. If we want to reduce regional economic inequality and ‘level up’, we need to see more of these booming companies in every part of the country.”