UK grows business numbers faster than most other major economies

Publications that covered this story include City AM on 11 December and Daily Mail and The Sun on 12 December.
  • 6% increase in UK’s total stock of businesses last year…
  • …compared to 2% rise in business numbers in major Western economies as a whole

The number of businesses in the UK is growing faster than most other major economies in the last year, our research reveals.

The UK ranks 6th in our global business creation table out of 21 countries studied, and comes first of the Western economies covered.

There has been a 6% increase in UK business numbers in the last year – or 218,000 more businesses. There were 3.9 million UK businesses in total in 2016 compared to 3.7 million in 2015 (see table below).

Overall, the major ‘Western’* economies studied saw their number of businesses increase by just 2% last year compared to the previous year.

Overall across all countries in the study (21), business numbers in 2016 increased by 8% on the previous year (see table below).

After years of constrained bank lending, greater access to alternative sources of finance such as crowdfunding and P2P lending may be opening up more opportunities for ambitious British entrepreneurs.

Falling rates of Corporation Tax have also helped ease the pressure on small businesses and their owners: the UK has one of the lowest levels in the G7 at 19% with plans to reduce it to 17% by 2020.

However, whether Brexit will slow the rate of growth going forward remains to be seen.

Daniel Hutson, partner in our London office, comments: “Enterprise and entrepreneurship in the UK have been gathering pace at impressive speed.”

“As a range of new sources of funding gain traction in the market and the Corporation Tax burden lightens, the start-up climate is improving, financial pressures are easing and investment for growth is on the cards. This is helping more companies capitalise on their potential and sharpen their competitive edge.”

“The figures suggest confidence in the economic outlook, despite Brexit. Whether this is sustainable, given the uncertainties that still surround the on-going negotiations with the EU, will be something the government will want to watch.”

The Top 5 rankings in the table for growth in business numbers are dominated by emerging economies.

China topped the table, with a 19% increase in business numbers in the last year. There were over 26 million Chinese businesses in total in 2016 compared to almost 22 million in 2015. India is in fifth position with an annual increase of 7% to 1.1 million businesses in 2016.

The US increased its stock of businesses by 2.1% to 11 million companies, while Japan saw an increase of just 1.7% in 2016, to make a total of 5.4 million businesses.

Daniel adds: “Many developed economies often do not have the same scope to grow new businesses at such rapid rates found in China and developing countries, so the UK is performing well.”

“Policymakers in other developed countries will want to learn from Britain’s success.”

China tops table for pace of growth in business numbers – increasing total stock by almost a fifth in a year:

*France, Germany, Italy, Japan, UK, United States
 
Notes on the figures (rounded to the nearest thousand):
Japan – 2015 figure is an estimate based on 2014 and 2016 figures; UK – figures have a year-end of 31 March 2016 and 2017, and are figures from UK’s Companies House on new incorporations and dissolved companies; Germany – 2016 figure is an estimate based on new registrations and de-registrations for 2016; Belgium – figures are for 2014 and 2015, the most up-to-date figures available; Vietnam – 2016 figure is an estimate based on annual growth rate 2010-15; Australia – Year end June 30 June 2015 and 2016; Pakistan – figures are for fiscal years 2015-16 and 2016-17 and measure the number of companies registered with the Securities and Exchange Commission of Pakistan (SECP).