The CFE business startup index
For the past seven years, the Centre for Entrepreneurs’ annual analysis of Companies House data has provided a detailed snapshot of business formations across the UK. Featured in the Sunday Times in early January, the Centre’s mapping of business formations to local authorities allows policy-makers, journalists and others to gauge the state of entrepreneurial activity across the UK.
The figures have revealed an upsurge in business formation since 2014. The latest Companies House data, as analysed by the Centre, was published on 12 January 2020 and shows that business formations reached a new record of 772,002 in 2020, growing 13.5% since 2019.
2020 was a year of highs and lows. January saw 0.6% fewer businesses launched than in 2019. By April as lockdown took hold, formations had fallen 29% year-on-year (with Scotland and Northern Ireland down 45%). By June, all nations returning to year-on-year growth, averaging 47% across the UK.
Remarkably, from June onwards, all English regions and devolved nations experienced continual growth in business startups despite further lockdowns. However, recovery and growth were not evenly balanced. Northern Ireland, Scotland and Wales experienced sharper falls in business formations in Spring and slower recoveries in Summer. Northern Ireland is the only nation to launch fewer businesses in 2020 than in 2019.
There is ongoing evidence of the ‘Covid economy’. The pandemic has led to major increases in manufacturing and retail of medical equipment, pharmaceutical goods, specialist clothing and PPE, and cleaning supplies. It has also boosted cleaning and disinfecting services. 222 company names featured the word ‘Covid’, 185 ‘PPE’, and 32 ‘Coronavirus’.
Consumer businesses increased significantly, with business startups in the wholesale and retail industry growing 60.5% year-on-year and totalling 190,379. Online retail startups more than doubled, totalling 43,127. New businesses retailing computers, sporting goods, games and toys also grew strongly in 2020.
Ongoing restrictions in the fight against Covid have severely harmed existing hospitality businesses, and in most categories, led to fewer formations in 2020 compared to 2019. Clubs, pubs, hotels and restaurants all saw a fall in business formations in 2020, as did conference organisers and tour operators. However, takeaway food shops and mobile food stands grew significantly. And with international travel restricted, many new camp sites, chalets, guest houses and B&Bs launched to cater for UK holidays.