I am delighted that RSM’s second annual report - The Road to Recovery: Insights from an international comparative study of business birth and death rates – has been published and is now available on our website. The report analyses national statistics on active businesses across 38 countries globally.
Business creation and destruction are among the most telling indicators of economic vitality. This year’s results show that the G7 are catching the BRICS in net new business creation (births minus deaths). The G7 rate increased by 1.9 percent in the year to 2013, compared to a Compound Annual Growth Rate (CAGR) of just 0.8 percent for the previous five years. The BRICS economies, on the other hand, saw net new business creation fall from a CAGR of 5.8 percent from 2007-11, to 4.9 percent in 2011-12.
France’s ‘Auto-Entrepreneur’ programme spurred the economy to lead the G7, and in fact all 36 countries, in net new business creation from 2011-12, with a 16.7 percent increase. The government programme, launched in 2009, is proving effective in reducing tax and regulatory barriers for start-up businesses. The US (+ 0.6 percent), Germany (+ 1.1 percent), and the UK (+ 1.2 percent) all experienced modest gains in business formation, while Italy posted a small loss (– 0.3 percent).
Continuing the trend noted in our 2013 report, South Africa exhibited the weakest performance in the BRICS group with a net loss of 82,000 registered companies, a decline of 10 percent. The country’s performance reflects lagging business confidence amid growing concerns over the political stability of the economy, while South African businesses also struggle to compete with mounting competition from faster-growing economies in the Sub-Saharan region. China continued to lead the US with the world’s largest active register (over 13 million enterprises), and also led the BRICS in new business creation from 2011-12, with a 9.1 percent increase.
These are just a few of the report’s conclusions.
I would like to thank the member firms of the RSM network who sourced the global data for this collaborative flagship report and David Bartlett, the report’s author and RSM’s Economic Advisor.