I was encouraged to see recent figures from StartUp Britain, reported by the FT, showing that 380,000 new businesses were started in the UK in the past 12 months, causing the total number of British companies to rise to a record 4.8 million.
This is a promising sign for the UK economy, particularly in the light of our own report published in August this year which found that the UK’s net new business creation in the five years to the end of 2011 was just 63,000 business, reflecting an annual compound growth rate of 0.7%, literally half the EU average over the same period.
The improvement is a sign of the country’s developing start-up culture. Nesta, the national foundation for innovation, reported that small to medium enterprises (SMEs) are now responsible for almost half of the UK’s new job creation. The coalition government continues to foster the growth of SMEs through tax breaks for investors and easier citizenship procedures for foreign entrepreneurs looking to kick-start their business in the UK.
The Enterprise Investment Scheme (EIS) is such an example, providing a series of tax breaks to investors looking to pledge between £500 and £150,000. Over £10bn of private funding has been put into EIS companies since the scheme’s inception and the last 12 months has seen a substantial growth in professionally managed EIS funds.
With the broader positive developments in the UK economy, the hope is that this growth momentum in the entrepreneurial side of the market will be sustained, translating into positive news for the jobs market and the economy overall.