Denby pottery closure: Study reveals 300,000 UK businesses failed in 2025
But only 1.5% of business owners believe their company is at severe risk of insolvency
The latest available figures show that 220,490 UK businesses closed during the year leading up to Q3 2025. While business creation remains strong across many parts of the country, closure rates continue to place significant pressure on local economies, employment, and high streets.
The data suggests that thousands of firms are still struggling with rising operating costs, weaker consumer confidence and ongoing economic uncertainty.
Nearly one in every twenty UK businesses failed during 2025
The estimated 288,018 business failures recorded in 2025 equate to around 5% of all UK businesses.
This means that roughly one in every twenty businesses disappeared from the market over the course of the year, highlighting the challenges many firms continue to face despite signs of wider economic recovery.
Northern Ireland was the only UK region where business deaths outnumbered births
Regional analysis revealed significant differences across the UK. Northern Ireland was the only region where more businesses closed than opened during 2025, recording a business death-to-birth ratio of 1.08.
The figure suggests business closures outpaced entrepreneurship in the region, making it a notable outlier compared with the rest of the UK.
Yorkshire and the West Midlands at the highest first-year failure risk
Among businesses launched in recent years, Yorkshire and the Humber and the West Midlands recorded the highest first-year failure rates in the UK at 7.5%. The North East followed closely behind at 7.4%.
The figures underline the differing challenges faced by businesses depending on location, access to investment and local economic conditions.
Richard Hunt, director at Liquidation Centre, said: “While the UK continues to see strong levels of entrepreneurship, the number of businesses closing their doors remains concerning.
“What stands out most is the gap between the number of business failures and the number of owners who believe insolvency is a serious risk. Many businesses experience financial difficulties gradually, which is why regularly reviewing cash flow and financial performance is so important.
“The businesses that tend to fare best are often those that identify issues early and take action before problems become more difficult to resolve.”
Looking ahead, forecasts suggest that up to 289,000 UK businesses could fail in 2026. If realised, the figure would mean business closures remain close to 2025 levels, indicating that many firms are likely to face continued pressure over the coming year.