Australia Sees Record High Business Closures Amid Economic Challenges

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As economic challenges continue to mount, Australia is witnessing a concerning surge in business closures, reaching the highest annual rate in four years.

According to fresh data released by the Australian Bureau of Statistics, almost 1,000 businesses are closing every day on average across the country.

Small and micro businesses, particularly those employing 1-4 staff, bore the brunt of closures, with a 1.8% decline in their numbers. The situation varied across states; Queensland saw an overall increase of more than 11,000 businesses, while Victoria recorded a net loss of 7,606 businesses, marking the first time business exits outstripped entries in the state.

Economic experts attribute this trend to a “perfect storm” small businesses face, including soaring energy costs, rising interest rates, and high insurance premiums. Luke Achterstraat, CEO of the Council of Small Business Organisations Australia, highlighted the need for government support to alleviate cost pressures on businesses.

“These figures emphasise the reality of how difficult it can be for businesses, particularly small businesses, to remain viable and open to trade,” Achterstraat said.

In the 12 months leading up to June 2023, Australia experienced a net growth of approximately 19,000 businesses. While this suggests some resilience in the face of adversity, it’s the lowest level of development recorded since the series began in 2019.

Cancelling the Commonwealth Games in Victoria also drew criticism, as it would have significantly boosted the state’s small businesses. Business leaders, including Paul Guerra from the Victorian Chamber of Commerce and Industry, called for a refocus of government support to prevent a further decline in business numbers.

“Without the private sector, there won’t be the private sector businesses, there won’t be the employment opportunities for people,” he said.

These business closures follow a recent spike in insolvencies, with 995 business collapses recorded since the start of July, indicating ongoing economic challenges for Australia’s business landscape.

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