The UK’s high streets are expected to empty out at a faster pace this year as extra costs imposed on businesses by Rachel Reeves are blamed for shops closing and a slowdown in chain store openings.
The rate of store closures is forecast to rise again as a result of the chancellor’s tax-raising budget last October, after a slowdown to 10 a day last year from 13 a day in 2023, according to research.
Overall, the picture for the UK’s under-pressure high streets improved slightly in 2024 despite significant numbers of high-profile banks and retail chain stores shutting. Net closures were the second lowest in a decade – beaten only by 2022 when retail destinations bounced back after the coronavirus pandemic lockdowns, according to the research by Greenstreet, for the advisory firm PwC.
Just over 12,800 stores closed in 2024 – 1,277 fewer than in 2023 – while 9,002 opened, just over 130 fewer than a year before.
The study did not include specific forecasts for the number of openings and closures for 2025 but predicted that costs, including a rise in the minimum wage and extra national insurance contributions from April, would accelerate the rate of closures.
Kien Tan, a senior retail adviser at PwC, said: “Announcements by retail and hospitality operators over the past couple of months suggest that many of them are being more cautious with their opening plans, partly because of higher operating costs following last year’s budget, which is why openings are likely to slow in 2025. New sites may be less viable.”
There had also been fears about the impact on consumer spending linked to job cuts expected as a result of Reeves’s changes.
While 2025 got off to a shaky start, consumer confidence stabilised this month after February’s record low, according to figures from the British Retail Consortium trade body released on Wednesday.
This was coupled with an increase in households’ retail spending expectations for the three months ahead. Expectations for DIY and home improvements moved into positive territory but the shift in spending was led by food, where inflation on basics such as dairy has returned.
Tan said the pace at which units on high streets, retail parks and in shopping centres had become empty appeared to have stabilised post-pandemic and that it was now matching the rate at which shopping and services were moving online.
PwC said that, in the long run, the number of shops and services in retail destinations would continue to shrink by 2% a year as the loss of key services, such as banks and chemists, reduced the reason to head there.
In 2024, chemists, pubs, banks and car or motorbike services such as dealerships and MOT centres, accounted for half of all net chain store closures, with the departure of Lloyds pharmacies from high streets and the closures of more than a dozen Wetherspoon’s swinging the numbers.
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UK banks have consistently closed branches as many consumers switch to digital banking, causing concern about the impact on local communities. The number of UK bank branches to have shut over the last nine years passed 6,000 earlier this year.
On Wednesday, Santander said it would close a further 95 UK branches this year, and reduce services in at least 50 more. Lloyds Banking Group said in January that it was closing a further 136 branches.
Convenience store chains expanded the fastest, led by Morrisons and Asda’s shift into smaller stores, followed by coffee shops, takeaways and budget retailers.
The twice-yearly report using data from Green Street, formerly known as the Local Data Company, tracks more than 200,000 chain outlets in more than 3,500 locations to gain an insight into the changing landscape of high streets, shopping centres and retail parks. The report for PwC does not include independent stores, which are tracked separately.