The number of active small businesses in the UK has fallen in the past year as reductions in profitability make it harder to remain profitable and operational.
New research by the Global Payroll Association (GPA) found the number of small-to-medium-sized businesses (SMEs) operating in the UK dropped by -1% between Q3 and Q4 2024.
The largest regional decline was seen in the South West, where profits fell by 6.1% between Q3 and Q4 of last year.
This is followed by the West Midlands (-1.1%), South East (-1%), Scotland (-1%), London (-0.3%), and the North West (-0.3%).
Chancellor Rachel Reeves’s Autumn Statement in October 2024 introduced increases to the National Living Wage and Employer National Insurance Contributions, which will vastly increase staffing costs for businesses of all kinds in April.
A recent survey of UK SME owners by GPA revealed that more than half have real concerns about the impact of the Autumn Budget tax rises, and 89% have had to issue staff redundancies in the months since Ms Reeves’ statement.
Melanie Pizzey, CEO and founder of the Global Payroll Association, said: “Small businesses in the UK are going through an incredibly difficult period. Employment is down, profits are down, and the number of operational businesses is also down. It doesn’t look good from any angle. The Autumn Budget has had a devastating impact before the tax increases have even taken effect.
“Businesses will now be hoping for some kind of relief or support from the Government’s upcoming Spring Statement on March 26, or else brace themselves for a tough couple of years ahead.”
She added: “Labour’s stance is that this painful period will be short-lived and soon pave the way for a much more prosperous economic future for UK businesses and the nation as a whole. Whether or not that comes to fruition remains to be seen.”
