New data shows a spike in the number of UK limited companies going out of business, and a near collapse in the number of new start-ups.
The study, from the Enterprise Research Centre, suggests the economy is now facing a worrying ‘pincer movement’ due the Covid-19 pandemic. Some 61,472 limited companies folded between the start of March and mid-April, with a parallel drop in the numbers of new firms registering with Companies House.
Comparing March this year with the full month’s data from last March, the number of firms going out of business was 70% higher than a year ago (up 21,206), while the number of new firms incorporating fell by 23% (14,270 fewer).
London saw the biggest absolute rise in numbers of company dissolutions in March – up by 6,431 compared with a year ago. There were notable variations by sector, too. While all sectors saw a rise in the number of company failures, transport was hardest hit with nearly three times more firms ceasing to trade (194%) compared with March 2019. Real estate, wholesalers and information services also saw marked increases in the number of businesses shutting down for good.
Newer companies have borne the brunt of the collapse in economic activity, with 46% of firms dissolving being less than three years old.