The number of UK businesses is on the decline, with small businesses seeing the sharpest drop over the past year driven by a steady decline in the number of new startups being created.
The Global Payroll Association (GPA) has analysed the total number of active businesses in the UK alongside the number of new businesses being created each year, and how these numbers have changed over the past 12 months and the past five years.
It says the data suggests there are currently a total of 5.49 million businesses operating in the UK. This marks an annual decline of -1% and a five-year decline of -6.3% since 2019’s total of 5.87 million businesses.
The largest annual declines have been recorded among the UK’s smallest businesses.
The number of businesses with just one employee has fallen by -5.2% since 2023; businesses with between five and nine employees have fallen by -2.3%; and the number of those with 10-19 employees is down -1.7%.
Additional data also shows that over the last five years the number of new businesses being created in the UK has fallen by an average rate of -1% a year.
Since the recent Autumn Budget there are now concerns that the number of small businesses in the UK is going to decline even further, says the GPA. With both employer National Insurance contributions and the National Living Wage set to increase in April 2025, there is going to be a significantly increased financial burden on businesses which will be difficult for many small enterprises to shoulder, it says, adding that as small businesses decline, it will leave an ecosystem in which larger organisations dominate the SME landscape.
Melanie Pizzey, CEO and Founder of the Global Payroll Association, says:
“We need the Government to do more to encourage entrepreneurship here in the UK. Our business landscape has long been famed for enabling the creation of a huge number of outstanding businesses with massive clout both here at home and around the world. It’s vital that we don’t now start stamping small businesses out purely to stabilise public funding. This is short-term thinking which ignores the fact that, if you enable small businesses to thrive and grow, the mid-long-term economic benefits are extraordinary.”
