Business start-ups were at their highest levels for 20 years in 2007. However, the slowing economy meant that the number of businesses closing also surged during the year.
A record 471,500 new businesses started up in 2007 – the highest annual volume since Barclays started tracking the market in 1988. The figures show an increase of 17% on the figures first recorded in 1988 (403,200), and an increase of 3% on 2006 (457,200).
Business closures also up significantly in 2007
On the downside, the figures also reveal that the number of businesses closing down in 2007 increased significantly to 498,900, an increase of 8% on 2006. The business closure rate reached 17% in 2007, which is very high by historical standards and just short of the previous peak for business closures which reached 18% in 1992.
Commenting on the figures, John Davis, Marketing Director for Barclays Local Business said, “It is clear that the past 20 years have seen business formation and enterprise become firmly entrenched even if there is the odd hiccup in any given year.”
“2007 recorded the highest annual volume of business starts partly driven by an ongoing boom in the construction sector. Over the last year close to 20% of all starts were construction related demonstrating that Brits’ obsession with home improvement is far from over. However, we also must recognise that closures increased markedly during 2007 reaching 498,900, an increase of 8% on 2006.”
UK Business Start-Ups – 2007 Highlights:
- Start up activity increased in 2007 compared to 2006 in all but one of the English & Welsh regions – Yorkshire (-1%) – with particular strong increases in the North East (11%) and West Midlands (11%).
- Activity across the eleven broad business sectors was more mixed with five seeing increases in start-ups, five declining and one unchanged. New company formation was particularly strong in Construction (20%) and Health, Education & Social Work (19%), although the former may have been boosted by tighter tax treatment of Managed Service Companies. Production (-12%) and Wholesale (-11%) suffered the greatest year on year decline.
- Business start-up numbers increased across all the age categories of owner-manager, with particularly large increases for those at the extremes. Volumes increased by 9% among the under 25s and 11% for those over 65, albeit from a very low absolute number
UK Business Start-Ups – 20 year highlights:
- The business stock reached 2.93 million in 2007, the equivalent of one firm per 8.7 people of working age, an increase of 15% over the last 20 years.
- More than seven million businesses have started in the last twenty years whilst a similar number have closed.
- The closure rate of the business stock has averaged 14%. The closure rate was at its peak in the 1991-92 recession, reaching 18% in 1992. It dropped as low as 11% in 2003 on the back of strong economic performance. It reached 17% in 2007.
- Less than 10% of the businesses that started up in the first quarter of 1988 were still trading at the end of 2007.