How Many New Businesses Fail in the Uk? (Statistics 2026)

Report Highlights:

7.7% of new businesses in the UK do not make it past the first year (2025).
The one-year survival rate is 92.3% (2025).
71.1% of new businesses will fail within the first 3 years.
Only 39.4% of small businesses reach the 5-year mark.
In 2023, the business birth rate was 11% (316,000 new businesses) and the death rate 10.8% (309,000 businesses closing).

UK Business Death Rate

In 2020, almost 11% of UK businesses (316,310) stopped trading.
47% of SMEs reduced operations, while 31% temporarily closed down completely in 2020.
20% of small businesses in the UK fail in their first year, and 60% fail within the first three years.
London had the highest business death rate in 2020 at 12.1%, followed by the West Midlands at 11.9% and the North West at 10.6%.
The transport and storage industry had the highest business death rate in 2020 at 14.7%, followed by business administration and support services at 14.1%, and the information and communication industry at 12.8%.
The top causes of start-up failures are running out of cash or failing to raise new capital (38%), lack of market need (35%), being outcompeted (20%), flawed business model (19%), regulatory or legal changes (18%), pricing or cost issues (15%), not having the right team (14%), mistiming the product (10%), poor product (8%), disharmony among team or investors (7%), failed pivot (6%), burning out or lack of passion (5%).

By the end of the second year, 30% of businesses will have failed.
During the 21/22 tax year, 810,316 new businesses were formed.
Approximately half of businesses fail in the first 5 years.
Only 30% of businesses remain after a decade, resulting in a 70% failure rate.
There are valid reasons for a business no longer existing, such as retirement.
The failure rate can vary between 15% and 25% in a single year.
Major events, like the Covid-19 pandemic, can significantly impact the failure rate.
Failure rates differ across industries, with healthcare businesses having a lower rate and warehousing and transportation businesses having a higher rate.
Some businesses may not be counted in the metrics due to reporting errors.
Businesses can continue to exist even when not performing optimally.
Only 1 of 5 of businesses fail within the first year, while 50% fail within the first five years.
Around 12.5% of businesses in the first year fail due to lack of preparation.
Overestimating the failure rate of small businesses is common.
About 50% of small businesses have a chance of surviving past year 5.

The number of small businesses in the UK has decreased by 6.6%, from 5.9 million to 5.5 million.
SMEs still make up 99.9% of the UK’s business population.
On average, 56% of SMEs have sought external finance.
Nearly all (91%) midsize company leaders