Decrease in number of UK business start-ups - Resolve Group UK

Decrease in number of UK business start-ups

Resolve Group UK

Decrease in number of UK business start-ups

Latest statistics issued by the ONS show an increase in the number of businesses ‘dying’ in the year 2016-2017 and a decrease in those being ‘born’.  

Despite this, the rate of business births has continued to exceed the rate of deaths, however, the gap in rates in 2017 is the smallest since 2012 providing further evidence that the current UK economic climate is continuing to prove challenging and generally detrimental to business.

The number of UK business ‘births’ (new business registrations) decreased sharply for the first time since 2010, from 414,000 to 382,000 between 2016 and 2017, a birth rate of 13.1% compared with a rate of 14.6% in 2016. The number of UK business ‘deaths’ (businesses that have creased to trade) increased from 288,000 to 357,000 between 2016 and 2017, a death rate of 12.2% compared with a rate of 10.2% in 2016. There were approximately 2.93 million active businesses in the UK during 2017, an increase of 92,000 on 2016.

There has been an overall slowing of the broader economy with a slight reduction in GDP in 2017 and a softening in investment; however the labour market continues to look strong with the employment rate at a record high. Depreciation of sterling has led to increases in costs for many businesses and the general economic uncertainty caused by Brexit may be making entrepreneurs wary of starting businesses.

Regional differences are also apparent with the North West showing the highest business birth rate at 15.9%, with transport and storage (including postal), and retail industries contributing the most to this increase. London was the region with the highest number of business births and deaths at 92,000 and 86,000 respectively: health and transport and storage (including postal) industries contributed the most to the business death increases in London.

In terms of industry sectors transport and storage (including postal) had the highest business birth rate at 18.5% although this was still a fall from 2016, whilst education had the highest death rate at 18.8%. In the previous period both transport and education showed a significant growth in single person employee limited companies which may subsequently have been affected by the recent amendment made by HMRC concerning ‘off-payroll’ working in the public sector.

ReSolve recommends that businesses should seek professional advice to help manage financial problems or establish long term business plans. We believe that early action is the key to avoiding or surviving financial difficulties. The difference between those that survive and thrive and those that fail is how well they manage difficulties.

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