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The dynamism of the UK’s private sector has plunged to its lowest ebb for eight years as bigger firms hit the rocks and new company creation according to research by Cynergy Bank.
The Bank’s research draws on latest ONS data finding that in 2024, new company formations plummeted to 306,995, the lowest since at least 2017. Meanwhile, the average turnover of failing businesses reached its highest level in the same period, indicating that even well-established, bigger firms are not immune to the current economic turbulence.
Cynergy says that the employment outlook is equally concerning as new businesses aren’t hiring as many people as they used to. Job creation through new businesses barely outpaced losses from closures, with a net gain of only 13,754 jobs in 2024. This figure pales in comparison to the 348,845 net jobs created in 2017.
Cynergy Bank’s Business Health Score which measures the ratio of new businesses created to those lost, reveals a stark divide across industries:
Agriculture: With a score of 0.52, the UK’s farming sector has been hardest hit, with only half of the closing businesses being replaced.
Manufacturing and Production: These sectors are barely treading water with a score of 0.88.
Wholesale Trade and Transportation: Both industries are struggling, scoring 0.89 and 0.86 respectively.
Flouring sectors included:
Health and Social Care: Boasting a score of 1.34, this sector is thriving, possibly due to more private companies stepping in where the NHS is struggling.
Education: The sector has a robust score of 1.31 and includes all types of education businesses from pre-primary to tertiary, special needs, sports and even driving schools
Real Estate: With a score of 1.30, property-related businesses are showing remarkable resilience.
London continues to outperform the rest of the country with a score of 1.12, compared to the national average of 1.03. In contrast, the East Midlands and Wales are experiencing the most significant business closures, with scores of 0.94 and 0.95 respectively.
Nick Fahy, Chief Executive of Cynergy Bank said “These figures present a sobering picture of the UK business environment and with the National Insurance increase looming in April, it’s hard to see it improving in the immediate future.
“However, it’s not all doom and gloom. Businesses in healthcare, real estate and education are booming. At Cynergy Bank, we’re committed to supporting businesses across all sectors, particularly those facing headwinds, by offering tailored financial solutions and expert guidance to navigate these turbulent times.”
Cynergy Bank Regional Health Scores for 2024-2021.
|
Region |
2024
|
2023 |
2022 |
2021 |
|
UK |
1.03 |
0.92 |
0.87 |
1.03 |
|
England |
1.04 |
0.92 |
0.89 |
1.04 |
|
North East |
1.06 |
0.92 |
0.90 |
1.09 |
|
North West |
1.05 |
0.88 |
0.90 |
1.04 |
|
Yorkshire and Humber |
1.03 |
0.89 |
1.02 |
1.07 |
|
East Midlands |
0.94 |
0.85 |
0.89 |
1.01 |
|
West Midlands |
1.00 |
0.83 |
0.85 |
1.12 |
|
East |
1.02 |
0.95 |
0.87 |
0.99 |
|
London |
1.12 |
1.00 |
0.90 |
1.10 |
|
South East |
1.02 |
0.93 |
0.80 |
0.93 |
|
South West |
0.97 |
0.89 |
0.89 |
1.03 |
|
Wales |
0.95 |
0.85 |
0.88 |
0.95 |
|
Scotland |
1.02 |
0.92 |
0.84 |
0.88 |
|
Northern Ireland |
0.96 |
0.87 |
0.78 |
1.10 |
