The number of active businesses in the UK has dropped, with small businesses experiencing the sharpest decline. A new analysis from the Global Payroll Association (GPA) highlights that there are currently 5.49m active businesses in the UK, marking a 1% annual decrease and a more significant 6.3% drop since 2019, when the total stood at 5.87m.

The steepest declines are among the smallest businesses. Over the past year, businesses with only one employee have fallen by 5.2%, while those with five to nine employees have decreased by 2.3%. Companies with 10 to 19 employees have seen a smaller, but still notable, 1.7% decline.

The study also reveals that the number of new business start-ups has been consistently declining, with an average annual reduction of 1% over the past five years. Concerns are growing that recent changes announced in the Autumn Budget could exacerbate these issues. In April 2025, employer National Insurance contributions and the National Living Wage are set to increase, potentially placing an even greater financial burden on small businesses.

The GPA warns that if these trends continue, large organisations may increasingly dominate the UK’s SME sector, leaving fewer opportunities for smaller businesses to thrive in an already challenging economic landscape.

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