New figures show that the business ‘birth rate’ grew to a near 10 year high in 2013. The business birth rate is a measures of newly established companies as a proportion of all enterprises in the UK.
The report, from the Office for National Statistics (ONS), revealed that:
- The number of new UK businesses established grew by 28% to 346,000
- The business birth rate grew to 14.1% in 2013, the highest since records began in 2004
- The administration and support services contributed the highest rate of business births
- The corollary, the business death rate fell to 9.7%, the lowest level since the financial crisis took hold in 2008.
- Finance, the insurance sector, accommodation and food services registered the highest business death rate.
- London registered the highest business birth rate, however it also topped the table for the business death rate
- The South West and Wales registered the lowest business death rate but also the lowest business birth rate
Business survival rates
The wider measure of UK business survival rates showed that only 41.3% of businesses born in 2008 were still active in 2013.
In addition only 91.2% of businesses born in the previous 12 months were still active in 2013.
In terms of regional differentials the South West fared best in survival rates at 45.5% where again London performed worst at just 37.1%.
Businesses in the health and education sector performed best with 5 year survival rates of 53.4% and 51.7% respectively whilst the finance and insurance sectors fared worst with less than a third, 31.4% still existing after 5 years.
A spokesperson for the ONS said:
“As economic conditions worsened, the rate of business births began to fall in 2008 on a trend that continued into 2010, from a high of 12.3% to a low of 10.0%. This is likely to reflect uncertainty around the economic outlook at that time and constrained access to finance as the financial sector adjusted to the global shock.
“The death rate of businesses in the UK fell slightly in 2008 before increasing sharply in 2009, rising above the birth rate. One factor behind this initial fall could be that a number of businesses continued to trade in the expectation that economic growth would resume quickly while benefiting from lower interest rates during this period. However, GDP growth did not return until 2010, by which time some of those businesses had ceased trading.”