The Office for National Statistics has published data, which shows that more UK businesses opened their doors in 2014 than at any point since 2000. It is estimated that 351,000 businesses were started, which is an increase of 1% in comparison with the year before. It does however not specify how many of these were one-person operations, which is a result of the boom in self-employment. The data does however show that since 2011, when the labour market recovery started and self-employment rose, the rate of starting businesses has exceeded the rate of those that have folded.
National chairman at the Federation of Small Businesses John Allan said, that as more people are considering self-employment and starting out in business as a rewarding career choice, business start-ups have reached unprecedented levels. An economist for at the British Chamber of Commerce Suren Thiru said, that the record high number of business start-up was “true testament to the entrepreneurial spirit that exists in the UK”. When also taking into account the companies that folded, there were a total of about 2.55 million active businesses in the UK in 2014. This is 102,000 higher than the year before.
Thiru however warned that a rise in the number failures in UK business was a warning sign, which means more needs to be done to help support young firms, as they could be the wealth creators of tomorrow. That also needs to include fixing the long-term structural failure of business finance in the UK. he suggested this could be done through a scaled up and fully functioning Business Bank that has the ability to work directly with high-growth enterprises.
London also reaffirmed its place as one of the most dynamic environments in the country with the highest rate of new business and company failures. London was followed by the North East and North West with Northern Island brining up the rear.
The impact of the recession can clearly be seen from the data – out of the new businesses founded in Britain in the depths of recession only one in four are surviving into their fifth year. In 2009 the economy contracted by 5.2% and out of the 236,000 businesses that started that year, only 98,000 or 42% were still operating in 2013.
Businesses founded in the south west of the country were most likely to still be in operation five years on, with 45% still in business. However those in London were the least likely still be trading, at just 39%, perhaps due to the high costs of doing business in the capital.
There were significant variations by sector – half of health and education companies were still operating after five years, greater than the only remaining 33% of accommodation and food services businesses.
Economists have argued that the record-low interest rates made it possible for many more businesses to stay in operation and service debts in comparison with previous recessions.