In the latest release from the Office for National Statistics (ONS), the United Kingdom experienced a slight downturn in the number of businesses as of March 2023. The registered Value Added Tax (VAT) and/or Pay As You Earn (PAYE) businesses totaled 2.727 million, marking a 1.5% decrease from the previous year.
This decline, the first since 2010-2011, contrasts with the relative stability observed during the COVID-19 pandemic. Notably, all legal status categories, except local authorities and non-profit organizations, saw reductions in business numbers.
Key Highlights:
- Legal Status Categories: Businesses under all legal status categories, including companies, sole proprietors, and partnerships, witnessed a decrease in numbers. Notably, local authorities and non-profit bodies were the exceptions, experiencing a modest increase.
- Companies: 2,039,920 (-0.9%)
- Sole Proprietors: 413,160 (-3.4%)
- Partnerships: 172,890 (-4.5%)
- Industry Breakdown: The professional, scientific, and technical industry remained the largest contributor, constituting 15.2% of all registered businesses. However, it experienced a marginal decrease of 0.4% compared to the previous year. Noteworthy is the continuous decline in the number of businesses within this industry over the last four years.
- Regional Trends: Most regions in the UK witnessed a decrease in the number of businesses between 2022 and 2023, with Northern Ireland being the exception. The South East saw a slight decrease of 0.4 percentage points since 2021.
- Overall Economic Context: The report suggests a divergence between business growth and economic growth in recent years. While the business population has shown slower growth since 2018, gross domestic product (GDP) has exhibited a small increase year-on-year in the first quarter of 2023.
Despite these challenges, the UK business landscape remains dynamic, with ongoing efforts to adapt to economic shifts and uncertainties.