Business deaths rise in Covid-era: Information and communications hit hardest

Drastic drop in new businesses across the UK over the course of the pandemic means the rates of business ‘births’ and ‘deaths’ are almost neck and neck.

Information and communications were the worst affected industry by the pandemic in the UK, seeing the largest rise in ‘business deaths’ for every 100 company ‘births’ between the start of COVID-19 and Q1 this year. 

School of Marketing analysed Office for National Statistics (ONS) and government data that recorded the number of businesses that were ‘born’ and ‘died’ during the eight quarters of the height of the COVID-19 pandemic (Q2 2020 to Q1 2022), compared with the preceding 24 months (Q2 2018 to Q1 2020). 

It found that within the Information and communications industry, for every 100 births there were 173.24 business deaths during the height of COVID-19, a huge 89% uplift on the 91.51 deaths recorded in the pre-pandemic quarters.

Other industries that saw drastic negative impacts over the past eight quarters include finance and insurance (50% increase in business deaths), professional and technical services (46% rise), and arts, entertainment and recreation businesses (21% uplift). 

The retail industry, in contrast, saw more success over the past 24 months compared to the previous period. At 69.94 business deaths for every 100 births, the sector ran at a 12.3% decrease in deaths compared to 2018/2020. 

Meanwhile the wholesale sector saw 81.4 deaths for every 100 births, down 20% from the pre-pandemic period.

Drastic drop in new businesses ‘post-pandemic’

Across all industries, there was a marked drop in new businesses over the course of COVID-19, the research found. The UK average for business deaths between 2018 and early 2020 wsa 86.58 for every 100 businesses that were born. Fast forward eight quarters later and this rose by 16%, at roughly 100.67 businesses dying per 100 births, meaning the average of business births and deaths are virtually equal since the pandemic began.

Ritchie Mehta, CEO of School of Marketing, said: “This data shows how much more difficult it has become to survive as a business since the pandemic. In the two years before the impact of COVID-19 on average more businesses were created than closed each quarter, but now the numbers of company births and deaths are basically equal.” 

“As entrepreneurs look to protect themselves against a harsher business environment, the value of skilled employees has never been higher. Therefore SMEs can take advantage of initiatives such as the Apprenticeship Levy scheme to bring in new staff or train current ones in digital and data-led programmes, with the vast majority of the training cost covered by the levy.”