It is concerning to see new businesses employing fewer and fewer staff, and the turnover of closing or relocating firms at an all-time high. It is possible that some of these larger firms are choosing to relocate abroad in response to recent unfavourable tax changes, which underscores the need for a more supportive environment for UK businesses.
Despite these sobering statistics, I strongly believe that the entrepreneurial spirit of the UK remains intact. This is highlighted in our Index, which shows strong new business creation in key sectors such as real estate, education, finance and health.
It’s crucial that we strive to keep this spirit alive. At Cynergy Bank, we remain committed to supporting businesses of all sizes with tailored financial solutions and expert guidance.
Start-up businesses are shrinking in size as the UK economy suffers a £27bn hit from closing companies. Cynergy Bank’s latest Business Births and Deaths Index draws on the latest ONS data for January to March 2025 to paint a picture of the nation's economic health.
2.64 employees for every firm opening down from 3.5 in 2017
The number of employees for every new business opening in the UK has fallen to a record low* in the first quarter of 2025, when the average number of staff was 2.64 per new firm, compared with 3.5 in 2017.
The number of jobs created through new business formation barely outpaced job losses from closures in the first three months of the year, with a net gain of only 4,334. This figure pales in comparison to 110,242 during the same period in 2017.
The data also shows that at £329,000, the average turnover of firms shutting their doors reached its highest level since records began*, with the total turnover of businesses closing or moving overseas** hitting £27.4 billion in the first quarter, £5.1 billion more than this time last year.
While traditionally the contribution from new businesses outpaced losses from those closing, this trend is also slowing. Over the past 12 months, the total turnover of shutting firms was £92.7 billion. This exceeded the £90.4 billion contribution from start-ups over the same period.
Winners and Losers
Cynergy Bank's Business Health Score**, which measures the ratio of new businesses created to those lost, reveals the following sectors leading the pack:
Real estate: With a score of 1.43, property-related businesses are showing remarkable resilience.
Education: The sector has a robust score of 1.38 and includes all types of education businesses from pre-primary to tertiary, special needs, sports and even driving schools.
Finance and insurance: Financial services and insurance businesses are buoyant with a score of 1.34.
Health and Social Care: Boasting a score of 1.18, this sector is thriving, possibly due to more private companies stepping in where the NHS is struggling.
However, the UK’s farming sector continues to struggle.
With a record low score of 0.43, less than half of the closing businesses are being replaced.
Regional disparities
The North East has outperformed the rest of the country with a score of 1.20, narrowly beating London at 1.19, and compared to the national average of 1.07. In contrast, the South West and West Midlands are experiencing the most significant business closures, with scores of 0.95.***
Nick Fahy
Chief Executive, Cynergy Bank
Annual regional data table
The below data table shows the annual 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 |
Methodology
Cynergy Bank’s report uses ONS quarterly data across 16 business sectors, available here: Business demography, quarterly, UK - Office for National Statistics . Available ONS data goes as far back as 2017.
Q1 2025 data was published on 29 April 2025. Business “births” and “deaths” are terms used by ONS. Strictly, these are enterprises added to, and removed from, the Inter-Departmental Business Register (IDBR), respectively. The IDBR is a comprehensive list of UK businesses used by government for statistical purposes.
Notes and definitions
* Available ONS data goes as far back as 2017: Business demography, quarterly, UK - Office for National Statistics
** Strictly, these are enterprises added to, and removed from, the Inter-Departmental Business Register (IDBR), respectively.
*** Cynergy Bank’s Business Health Score divides the number of business births by the number of business deaths in any given industry to give a snapshot of overall sector health. For example, a score of 1.30 means for every one business going bust 1.3 new businesses are being created. Scores below 1 indicate more businesses are closing than being formed and the industry is in decline.
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