More than half of new firms failing in Northumberland

More than half of new companies being started in Northumberland fail to survive their first five years in business, according to new figures.

By Alex Ross
Wednesday, 9th December 2020, 3:00 pm
Most new firms do not survive more than five years in Northumberland
Most new firms do not survive more than five years in Northumberland

The Federation of Small Businesses (FSB) says firms were "already up against it" before the Covid-19 pandemic - but they are now reporting record falls in revenue with many posed to cut staff.

Office for National Statistics data shows 1,140 businesses in the area were set up in 2014 – but after three years only 690 were still active and, by 2019, just 470 remained.

That equates to a five-year survival rate of 41%.

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Mike Cherry

Nationally, the five-year survival rate to 2019 was 43%.

The ONS figures also reveal one-year survival rates for new companies which were set up in 2018.

In the county 1,010 businesses were still active one year on from their launch, a survival rate of 90% which is higher than the UK rate of 89%.

Last year, 1,070 new businesses were launched in Northumberland.

At last count there were 10,525 active companies in the area.

Mike Cherry, FSB national chairman, said small firms were already struggling with political uncertainty and a surge in operating costs before the Covid-19 pandemic.

He said Government support, such as the Eat Out to Help Out scheme, had led to a “summer bounce”, but that many were now struggling.

He added: “Firms still report a record drop in revenues, while the number planning to let staff go is at an all-time high.

"Exporters– still without any significant clarity around what the future holds for trade with Europe – say international sales have plummeted."

A Government spokesperson said: “We are committed to making the UK the best place in the world to start and grow a business.

"That is why we have invested more than £623 million in start-up loans for 75,000 new businesses since 2012 and created a competitive tax environment that rewards entrepreneurship.

"We are also looking to refresh our Industrial Strategy to stimulate economic growth to create jobs and new business opportunities for decades to come.”

They added: “We also understand the pressure businesses are currently under, which is why we have acted to support them through the pandemic.”