Coronavirus pandemic leads to more UK business closures – and start-ups

FILE PHOTO: People walk during the morning rush hour in the financial district of Canary Wharf amid the outbreak of the coronavirus disease (COVID-19) in London, Britain September 28, 2020. REUTERS/Toby Melville

LONDON (Reuters) – Britain’s coronavirus pandemic has led to widespread businesses closures but also a surge in start-ups as entrepreneurs sought to capitalise on a boom in online shopping, according to data published on Wednesday.

The figures showed a 37% rise in business closures and a 24% increase in start-ups compared with a year earlier, both the biggest changes since the data series began four years earlier.

Information and communication businesses – covering sectors such as computer programming, motion picture and sound recording and radio and TV broadcasting – accounted for more closures than normal, the Office for National Statistics said.

But accommodation and food services businesses made up an unusually small share of closures, despite being hit hard by lockdowns since March last year. The ONS said that might reflect the government’s emergency support measures for those sectors.

Online shopping – which accounted for a record share of spending last year – and related areas such as warehouses and logistics accounted for a lot of the new business creation.

New start-ups were smaller than previous years, with an average of 2.7 staff, down from 3.5 before.

Businesses which closed were also slightly smaller than before, with an average of 2.6 staff.

The ONS classified the figures as ‘experimental’ and potentially less reliable than longer-running annual data on the number of businesses operating in Britain.

Separate government data on company insolvencies has mostly shown fewer businesses being wound up in 2020 than in 2019, partly reflecting delays to court proceedings and government support measures. But in December they exceeded year-ago levels for the first time since the start of the pandemic.

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