The number of UK businesses formally closing their doors hit a 20-year high in the final quarter of 2024, marking a challenging period for the country’s economy since Labour took office.
According to research firm Beauhurst, a total of 198,046 companies were struck off the official register in the last three months of the year.
The latest figures from Companies House show that the number of companies dissolved in the fourth quarter of 2024 surpasses peaks seen during both 2021 and the second quarter of 2009, when the economy was reeling from the global financial crisis.
As reported in the Times, Henry Whorwood, managing director of research and consultancy at Beauhurst, commented:
“These companies dissolving are a consequence of the budget, as well as the culmination of a tough financing environment in 2024 in general. We really need to make sure this doesn’t get worse.”
The surge in closures comes as the volume of new business incorporations during 2024 fell by 8 per cent to 807,000, according to separate research from Zempler Bank, a lender to small firms.
Rich Wagner, chief executive of Zempler Bank, highlighted new Companies House powers and increased fees as factors contributing to the decline in new business formations.
“It will be interesting to see whether the changes at Companies House, which may have the effect of weeding out those who aren’t serious about starting a company, result in a higher proportion of businesses surviving, even in challenging economic conditions,” Wagner said.
The cost to incorporate a company online rose from £12 to £50 in May 2024. Following the fee hike, the volume of registrations dropped by nearly 20 per cent year-on-year between May and December.
In 2023, a record 900,000 companies were incorporated, but around 40,000 were subsidiaries of existing firms, and many others were shell companies set up for future use. Online retail was the most popular sector for new businesses, with over 82,000 companies registered, followed by 49,000 in property letting.
The surge in closures and fall in incorporations underscore mounting pressure on businesses amid rising costs, regulatory changes, and tough economic conditions.
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