Data from the Enterprise Research Centre (ERC) shows a sharp decline in new UK start-ups between 2017 and 2018. Experts from the research team say that the ongoing economic uncertainty caused by Brexit is the reason behind this drop in numbers.
Figures show a decline in new UK start-ups
The ERC is a research institute comprised of a high level of researchers from several universities across the UK. From figures gathered between 2017 and 2018, the research shows a decline of 12.9%.
Start-ups dropped from 325,900 in 2017 to 284,000 in 2018, according to the Local Growth Dashboard report created by the institute. This annual report takes in a wide range of metrics when measuring the growth of small and medium enterprises (SMEs) in the UK.
Perhaps most pertinently, the report shows a decline even in areas that had showed significant growth prior to the vote to leave the European Union in 2016.
Regional figures show sharp decline in Northern Ireland
Regionally, the biggest fall can be seen in Northern Ireland, which shows a decline of 15.2% in new start-ups. The launch of new SMEs in England has dropped by 13.3%, in Scotland by 10.9% and in Wales by 1.2%. This records an average drop of 12.9% across the whole of the UK.
Breaking the figures down even more shows the biggest fall in new SMEs can be seen in Swindon and Wiltshire. This region records a drop of 45% in the launch of new businesses.
The lowest number of new start-ups between 2017 and 2018 in the country can be found in Northern Ireland, with just 18. In terms of the survival rates of established businesses during the same time period, the lowest percentage is in Sheffield, with 49% failing. Across the UK, the average drop in start-up survival stands at 55%.
There is some good news
While these figures make for sobering reading for the start-up sector as the UK heads towards Brexit, there are some brighter moments. Three areas recorded an increase in the number of start-ups.
The northern area of Northern Ireland shows a 2.6% increase in new start-ups, while Liverpool shows a 2.8% rise. Worcestershire shows the best increase in new businesses, with a rise of 9.2%.
Some industry experts say that the economic uncertainty caused by Brexit is behind the fall in numbers of new start-ups. For example, the deputy director of the ERC, Mark Hart believes that entrepreneurs are holding back while they wait for clarity on the Brexit issue.
Mr Hart is also professor of small business and entrepreneurship at Aston University’s business school. He says that if the trend towards entrepreneurs hesitating on launching start-ups, there will be a corresponding decline in job creation.
James Turner, Managing Director of Turner Little Limited says: “At first glance these figures are worrying for the small business sector. However, we must remember that there is plenty of evidence to show that established small businesses are continuing to grow successfully in some areas of the country.
“It is frustrating that the potential growth in productivity has slowed down across the majority of the country. It’s difficult to avoid the hypothesis that the uncertainty surrounding Brexit is contributing to the decline in new start-ups. Before Brexit, many areas and sectors were seeing a steady increase in start-up launches. These figures show that it has definitely slowed down, and the most likely reason is Brexit.
“Having said that, strong businesses that can prove there is a demand for their services and products are still landing funding. Indeed, across some niche sectors, there are very high value funding rounds still taking place. There is still space for businesses to grow, and entrepreneurs with a strong business idea and belief in their success, should not let Brexit hold them back. However, policy makers and the Government must take note of these clear warning signs and work to create the certainty that the sector needs.”
About Turner Little
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