How are businesses faring in the UK?
The last few years have been tumultuous for businesses all over the UK. Shockwaves from the pandemic, Brexit and the resulting economic climate are still impacting ventures of all sizes. The UK officially fell into recession during the final quarter of 2023, signifying a shrinking economy and a tougher climate for businesses and consumers. But how have businesses been faring in the last few years?
New businesses still emerging
Despite the variety of challenges facing businesses, that hasn’t stopped the number of private entities increasing in the year to October 2023 by around 54,000. Sole traders and small businesses make up the majority of the private sector, with SMEs representing more than 99% of all UK businesses. While the number of new businesses being created isn’t necessarily an indicator of economic health, it does show that there are still opportunities to be had.
Insolvencies on the up
New businesses continue to emerge but, at the other end of the spectrum, insolvencies have seen a significant rise over the last few years. Compared to 2021, the level of businesses effectively going bust was up a staggering 52% in 2023. Many say interest rates, inflation and skills shortages have all contributed to this. The pandemic and Brexit have been key drivers for these factors.
Costs still hurting companies and consumers
The bite of inflation continues to be felt up and down the supply chain and by customers purchasing products. Despite recent falls in inflation rates, the cost of doing business is still markedly higher than it has been over the last decade. Ultimately, this has forced cuts in some areas, redundancies, increased prices and reduced consumer spending which comes back to impact businesses.
Certain UK regions more promising than others
There are a few shining lights when it comes to business prospects in the UK. Certain cities such as Liverpool are expecting record growth and economic development over the next few years. More than ever, success is so closely linked to the prosperity of its region and surrounding businesses. For example, the success of bookkeepers and agency businesses is fundamentally linked to the growth of core markets and sectors.
The business landscape has been turbulent over the last few years but that hasn’t stopped some from finding ways to capitalise on it. The number of businesses going bust has certainly increased, mostly thanks to the lasting impacts of the pandemic and Brexit, but there are a few promising signs for businesses to hold on to.
