Decline in new startups expected to be over by year end

The decline in start up business numbers is expected to ease by the end of 2008, according to Barclays estimates. The bank's figures expect 380,000 new businesses to start up this year, compared to 430,000 in 2007.

The new figures were revealed today at the National Federation of Enterprise Agencies conference in York.

Alongside a steadying in start up business numbers, the bank also expects the SME market as a whole will be better prepared financially to weather the economic downturn.

Nic Bayley, Head of Product for Barclays Local Business said:

“We believe most of the downward adjustment will have occurred by the end of the year, and a lot of the fall has already occurred.

“Business closures are also past their peak and are likely to level off shortly. While we expect some further decline in the stock of firms into 2009, by early 2010 we could be seeing the first real signs of a pickup in SME numbers.

“The spectre of 1993 – when we last saw a recession – is often invoked, but today matters are fundamentally different. Small businesses have kept their borrowing in line with their assets, rather than borrowed excessively.

“These are savvy businesses which have been prudent with their finances."