Despite criticism that the coalition government has presided over a shrinking economy, 370,000 new companies have been founded since David Cameron took office in 2010, according to business intelligence firm QlikTech. The study took the form of an app analysing Companies House data from the last 20 years. It found that the rate of new openings is a massive improvement on the final two years of the Labour government, when only 47,800 were started. Seemingly, entrepreneurship is the word of the hour…
To be fair to Labour, the global financial crisis had only just kicked off and a deep recession was getting underway, so believe it or not the economy is much more buoyant now than it was. But the study also found some longer trends that have persisted in the business community since the 1980s:
- The rate of business creation is not affected by rises in fuel costs or the rate of corporation tax.
- The appointment of prime ministers and new governments taking office generally means a fall of around 19% in the rate of new business creation (although not this time around).
- IT consultancy and software form the bulk of new businesses created since 2010, compared with property development and civil engineering between 1988 and 1990.
The results of the study are released as Zurich publishes its SME Risk Index, which found that 10% of SMEs have considered closing down in the last three months, and that the majority of business owners are ‘very concerned’ about the current economic situation. So whilst QlikTech finds entrepreneurship is blossoming, many companies are operating on a hand to mouth basis with the future of the company hanging in the balance. On the plus side, the Index also showed that almost a quarter (22%) of British SMEs are looking to expand overseas, mainly by trading online. Big plans on a shoestring budget – classic entrepreneurial spirit.
The news that the number of new companies is growing at near eight times faster now than just after the economic meltdown is heartening for UK plc. Today’s statistics suggest Britain may just have the entrepreneurial zeal needed to dig itself out of this hole. Let’s hope that private sector growth continues apace…