Three out of five new firms failing in South Tyneside

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 565 businesses in South Tyneside were set up in 2014 – but after three years only 355 were still active and, by 2019, just 225 remained.

That equates to a five-year survival rate of 40%.

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

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

In South Tyneside 435 businesses were still active one year on from launch, a survival rate of 90% which is slightly higher than the UK rate of 89%.

Last year, 655 new businesses were launched in South Tyneside – 165 more than those which ceased to trade in the same year.

At last count there were 4,100 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 £623m 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. "