The Looming Shadow

Private Sector Job Losses and Business Closures

Forget the deliberately misleading headlines and data manipulation. A deep dive into the recent data paints a concerning picture of the UK private sector. The loss of an estimated 108,000 jobs in April 2025, coupled with the alarming statistic that 3% of businesses reported closure between January and March of this year, signals a significant contraction with potentially far reaching consequences, particularly for small and medium-sized enterprises (SMEs). The concentration of job losses within the hospitality sector further underscores the fragility of industries heavily reliant on discretionary spending and consumer confidence. The crazy extra burden by increasing the minimum wage, and increasing employers national insurance burden is already biting.

These figures are not merely symptoms of isolated sector challenges; they are indicative of a potentially broader economic malaise, or maybe crash would be a more suitable word, that could be exacerbated by inappropriate policy responses. Increasing public sector jobs to mask the figures does cut the rug. A sharp contraction in private sector employment and a rise in business closures can be both a cause and a consequence of insufficient nominal demand within the economy due to fear. I have noticed that there has been a dramatic reduction in yachting activity in Scotland which is normally vibrant with the yachting community bringing tourist money to the west coast and islands.

The loss of 108,000 jobs translates directly into reduced aggregate income and spending power. As individuals lose their livelihoods, their ability to consume goods and services diminishes, creating a negative feedback loop that can further depress demand and profitability for businesses. This is particularly acute for SMEs, which often operate with tighter margins and have less capacity to absorb sustained periods of reduced revenue. The disproportionate impact on the hospitality sector, a significant employer and contributor to local economies, highlights the vulnerability of sectors sensitive to shifts in consumer sentiment and economic uncertainty.

The 3% business closure rate in the first quarter of 2025 is equally troubling. Business closures represent a permanent loss of productive capacity, entrepreneurial spirit, and employment opportunities. While some level of business churn is a natural part of a dynamic economy, a figure of this magnitude suggests underlying systemic pressures. These pressures could stem from a variety of factors, including elevated borrowing costs, persistent inflationary pressures eroding real incomes and increasing input costs, or a general lack of confidence in the economic outlook.

A careful and data dependent approach is warranted. A thorough analysis of the underlying causes of these negative trends is crucial. The contraction primarily driven by external shocks, such as a significant rise in the cost of labour for business and sector specific issues where the burden is proportionately higher.

For small businesses, the current climate presents significant challenges. Access to affordable credit becomes increasingly vital for survival and potential restructuring. Policies that facilitate reducing the burden on viable SMEs and provide targeted support to sectors facing acute difficulties are necessary to mitigate the risk of widespread bankruptcies and further job losses.

The recent figures on private sector job losses and business closures serve as a stark warning. The government lacks a deep understanding of the real economy and particularly the vulnerabilities of SMEs. Or do they? Is this just a strategy to bring everyone down to a universal wage?

I see no indication of the government showing and plans to safeguard the livelihoods and futures of countless small businesses across the UK. It is tough enough to start and run a small business. 15 to 18% fail within a year and 50% last less than 5 years.

There is an opportunity for small businesses to avert the impending pressure on there business by being smart. AI can scale your business and with shred and professional implementation you can flourish, rather than just cling on. You can be the survivor when your competitors are throwing in the towel.

As a SME owner I feel the pain.

Perhaps a nursery rhymes that alludes to social economic pain will become popular again.

Half a Pound of Tuppenny Rice, half a pound of treacle, that's the way the money goes, pop goes the weasel!

Up and down the city road, in and out the eagle, that's the way the money goes, pop goes the weasel!

This originally relates to London and uses cockney rhyming slang. Weasel refers to weasel and stoat = coat

Pop refers to pop shop (pawn shop)

The song is reference is to the tough economic conditions people were living under when they needed to pawn their clothes to get some money.

The eagle refers to the Eagle Tavern, a pub on the corner of City Road

The poor spent their wages on gin and beer to forget their woes for a few hours.