(Alliance News) - A record low number of businesses were created across the UK in the final quarter of last year, new figures showed Thursday.
Business group the Institute of Directors warned the falling trend was "concerning" and called on the government to "ease the significant pressures on business".
It comes just days after economic forecasters at the EY Item Club predicted the UK economy will improve more slowly than anticipated this year, downgrading Chancellor Rachel Reeves' hopes to rapidly boost growth.
Figures from the Office for National Statistics, ONS, show 65,450 new businesses were created across the UK in the three months to December – down 8.5% from the same quarter a year earlier and the lowest number of any quarter since records began in 2017.
Some 13 of the 16 main industrial groups saw a fall in the number of businesses created over the past year.
The most significant falls were seen in the transport and storage industry, followed by the business administration and support services sector.
But separate figures from NatWest indicate there were around 5.6 million active businesses in the UK as of the end of 2024, the highest figure on record.
Anna Leach, chief economist at the Institute of Directors, said the drop in business births was "concerning" and called on the government to alleviate financial and recruiting pressures on businesses.
Leach said a swift decline in business confidence, the rise in national insurance contributions and minimum wage hike announced at the recent budget, as well as reforms to employment law "seem to have cooled business dynamism in the UK".
She warned business leaders feel "the attractiveness of the UK as a business location has weakened further since the Budget".
Leach said: "Our most recent polling shows that addressing the tax burden on business is crucial for lifting business confidence, followed by a scaling back of employment regulations and improving the UK's EU trading relationship.
"While the recent shift in the government's rhetoric to emphasise growth is welcome, it is clear that the breadth and scale of cost increases announced at the budget will continue to dampen entrepreneurial activity and economic growth.
"Until the government seeks opportunities to ease the significant pressures on business, there's a very real risk that the job of lifting the UK's potential growth is made harder."
Pranesh Narayanan, research fellow at the Institute for Public Policy Research, said both business births and deaths must increase to support economic growth.
Narayanan added: "Struggling public services and historically low levels of investment are holding businesses back.
"The government has started to take steps in the right direction, such as recent announcements on infrastructure development, which should help innovators.
"But, to go further, they should make sure that the upcoming industrial strategy prioritises support for new companies, and a level playing field for them to compete against existing large players."
The ONS figures also show 69,435 businesses closed in the three months to December, which was 7.3% lower than in the same quarter in 2023.
A government spokesperson said: "We're backing British business through our Plan for Change, which includes tackling the scourge of late payments and introducing a fairer business rates system which incentivises investment.
"We will be publishing our plan to help small businesses start up and grow later this year."
By Clara Margotin
Press Association: Finance
source: PA
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