Start-up businesses suffer largest fall in 10 years

27 03 2006 United Kingdom

The number of start-up businesses saw the biggest fall in the last decade, according to Barclays’ latest report.

2005 saw a sharp drop in the number of people starting a business, a fall of over 58,000 compared to 2004, as a result of the UK’s economic slow-down says Barclays Bank.

In 2004 there were 446,500 new businesses that started trading in England and Wales, but this fell to only 388,300 in 2005, a decline of 13 per cent. This was the biggest slump in numbers of start-ups in the last ten years.

According to Barclays’ research, this level of decline has not been seen since the early 1990s when the country was beginning to recover from recession.

John Davis, a business marketing director for Barclays, commented: “The number of businesses started last year moved back to more typical levels after a couple of boom years.

“The 13 per cent fall in start–ups in 2005 in effect is a large drop from a record couple of years,” he said. The number of new businesses grew by 64,000 a year in 2002 and 2003.

“The underlying market in start-ups is still reasonably strong,” he claimed, pointing to a 7 per cent upturn in start-up numbers during the second half of 2005.

The largest drop was seen in the North East, which experienced falls of 35 to 50 per cent compared to the number of new businesses created in the previous year. The biggest gains in new businesses were in parts of the South East, followed by Lancashire and Birmingham.

The report also showed a large fall among female entrepreneurs. The number of new businesses started by women declined by 14 per cent.

Barclays noted a ‘surprisingly modest’ increase in business closures in 2005. According to Barclays’ figures, 333,700 businesses stopped trading last year compared to 321,500 in 2004.