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More than four in ten firms set up since start of credit crunch in 2008 have folded – and the survival rate is getting worseNearly one million firms shut down between 2008 and 2011The high street has also suffered particularly badly in the last few years the research says
23:26 GMT, 13 December 2012
More than four in ten firms created since the credit crunch crisis in 2008 had gone out of business by 2011 – and the survival rate is getting worse.
Altogether, nearly a million businesses shut down in the three-year period, according to figures released yesterday by the Office for National Statistics.
New businesses are increasingly bearing the brunt of the economic gloom. Of firms ‘born’ in 2006, 66.2 per cent – two-thirds – were still trading three years later.
Big chains such as Clintons, Game, Peacocks, JJB and Comet have either vanished completely or lost hundreds of outlets since 2008
The figure dropped to 63 per cent for companies created in 2007.
It has since fallen still further, to just 58 per cent for 2008’s start-ups.
The toll shows how hard it has been to hold on to customers and cut back on spending enough to stay in operation.
But the ONS did give some hope in that the grim prospects do not appear to have deterred entrepreneurs. The ‘birth’ rate for businesses outstripped those going bust last year.
Some 230,000 firms went out of business in 2011, but that was more than off-set by 261,000 start-ups.
The figures reveal there are 2.34million businesses in operation in the UK.
The figures are derived from a database which lists all businesses registered for VAT or pay-as-you-earn tax for employees. A new registration counts as a ‘birth’ and a business which deregisters is a ‘death’.
The high street has suffered particularly badly in the last few years.
Altogether, nearly a million businesses shut down between 2008 and 2011
The Forum of Private Business said 15,000 retailers ‘rolled down their shutters’ in town centres between 2000 and 2009. A further 10,000 shut down in the following two years.
The forum warned that the rate of closures is ‘gaining pace’.
Big chains such as Clintons, Game, Peacocks, JJB and Comet have either vanished completely or lost hundreds of outlets.
Around 32 shops closed every day over the summer, which raises the spectre of yet more high streets where traditional shops have all but disappeared.
A toxic combination of losing customers to online shopping and large shopping centres which often offer free parking is being blamed for the devastation on the high street.
In a bid to combat the alarming mortality rate, business campaigners are urging councils to scrap town centre car parking charges.
Next year’s hike in business rates can only make it more difficult for firms to survive. The rise is based on September’s inflation figure of 2.6 per cent and will come into force in April.
Business rates are worth around 25.7billion a year, according to the Local Government Association.
To help firms, the Chancellor last week revealed plans to cut corporation tax from the current rate of 24 per cent to 21 per cent by 2014.
John Walker, national chairman of the Federation of Small Businesses, said: ‘With the unprecedented economic situation the global economy faced in 2008, it is unsurprising that survival rates for new business dropped.
‘We know the credit crunch starved businesses of capital. A deep recession in the UK reduced consumer spending power.
'While tentative growth has returned, the Government must continue do all it can to help start-ups.’