Small businesses say one in four High Street shops near them lay empty – with two out of three saying it is now harder to succeed here than in rest of Europe
A new study of 526 UK small businesses has found that town and city centres are increasingly blighted by empty shops, with owners saying the UK is now a tougher place to trade than the rest of Europe. The report, published by small business network Enterprise Nation, blames rising wages, business rates, energy bills, National Insurance and VAT for stalling growth on the high street, a trend that risks further hollowing out British town centres and holding back job creation.
The Growth on Hold report found 22 per cent of shop owners say more than a quarter of nearby shopfronts are vacant, while 64 per cent believe Britain is harder to operate in than its European peers. Some 77 per cent of high street firms have delayed growth plans and 42 per cent have cut customer-facing staff, with two-thirds paying business rates compared with just a fifth of other small businesses. Case studies included Perky Blenders, a London coffee chain whose annual employer National Insurance bill has risen by over £20,000 since 2024, and Fitzrovia restaurant Broken Eggs, whose owner said rising costs have swallowed all the profit from its growth. VAT was cited as the top pressure by 29 per cent of firms, ahead of wages at 24 per cent, with cutting VAT now businesses' leading policy demand.
- Study: one in five shop owners report over 25% of nearby shops empty
- 64% of small firms say UK harder to trade in than Europe
- Rising wages, rates, NI and VAT blamed; VAT cut is top demand
New here? Start with this
Housing and retail costs aside, this story is about how UK small businesses view the state of the high street. Enterprise Nation, an organisation that represents and supports small firms, surveyed 526 of them for a report called Growth on Hold, looking at empty shops, running costs and how the UK compares with other European countries for retailers and independent traders.
The report points to several costs that have been rising together: wages, business rates (a property-based tax paid by many shops and other commercial premises), energy bills, employer National Insurance contributions, and VAT. It argues these pressures are combining to make it harder for high street businesses to grow, forcing some to delay expansion plans or reduce staff, and leaving more shopfronts standing empty in town and city centres.
This matters because high streets are often seen as a barometer of local economic health, shaping town centres, employment and the range of shops available to shoppers. The debate touches on wider questions about UK tax and business costs, including calls from some business owners for changes to VAT, and sits alongside broader discussion of how government policy affects small firms' ability to compete.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Advocates for easing the tax and cost burden on high street firms argue that rising business rates, employer National Insurance, VAT and energy bills are combining to make marginal trading impossible, even for otherwise successful independent shops, cafes and restaurants. They contend that when two-thirds of small retailers already shoulder business rates that most other small firms do not pay, and when rising staff costs eat entirely into growth, the state is effectively taxing town centres into decline. On this view, targeted relief such as a VAT cut or business rates reform is not a subsidy but a necessary correction to a system that disproportionately penalises physical, town centre trading compared with online or out-of-town competitors, and failing to act risks accelerating empty shopfronts, job losses and the erosion of civic life in British towns.
The case against
Others argue that framing high street decline primarily as a tax problem overlooks deeper structural shifts, including the long-term move to online shopping, changing consumer habits and rising commercial rents, which no plausible tax cut would fully reverse. From this perspective, National Insurance, VAT and business rates fund public services, infrastructure and the welfare state that businesses themselves rely on, and a responsible government must weigh any relief against the resulting hole in public finances or the need to raise revenue elsewhere. They would also note that a single advocacy-group survey of 526 businesses, while a useful signal, reflects the perspective of those already under pressure and should be weighed against broader economic data before policy is reshaped around one sector's preferred remedy of tax cuts.