The number of businesses in private sector is growing every year in United Kingdom, according to fsb.org.uk there were 5.4 businesses registered in UK which grew by about 2.7% from 2014. These are the list of top 3 economic reasons why businesses fail, based on our finding from other resources.
In perfect competition there are a lot of businesses that offers identical products and services. Higher the number of companies register the higher the competition. According to gov.uk the problem in market sector is when market is working well companies compete by offering cheaper and better product to their customers.
Fail to pay tax
According to simplybusiness.co.uk one of the reasons why businesses fail in UK is because they are unable to pay taxes. It is highly likely that most companies are unable to pay their tax on time and according to Simply Business the firms should HMRC immediately when they are having difficulties in paying their tax.
Another economic reason why businesses fail in UK is due to the lack of enough budget. According to the intuit.co.uk 29 percent of the small business failure is due to not having enough cash. Based on an article published at telegraph.co.uk the businesses fail due to lack of banks lending. The companies likely to fail with small budget and when there is limitation in borrowing money from banks to finance the operation of their business.