Tougher business climate blamed for drop in new UK start-ups

The Centre’s analysis of annual business formations is featured in the second article of the FT’s special report on ‘Understanding Entrepreneurs’.

After a remarkable surge over the past decade, the UK’s entrepreneurship boom appears to be slowing down. The number of new company formations fell by more than 10 per cent in 2017, from 657,790 in 2016 to 589,008, according to the Centre for Entrepreneurs (CFE), a think-tank and lobby group.

The fall ended a period of uninterrupted growth in the number of new company formations that started in 2008, according to government data.

CFE says the main cause for the downturn was probably technical — the government had changed rules to stop public sector workers declaring themselves as self-employed contractors from April 2017. For example, in the rural county of Wiltshire, 10,164 new businesses were registered in 2016 with 7,475 (73 per cent) registered to one accounting firm that provides payroll solutions to contractors. In 2017, only 3,409 businesses were registered in Wiltshire, only 458 of which were registered to this address.

However, Matt Smith, director of the centre, says that even after the contractors were stripped out from overall figures, there was still a small fall in the number of business registrations.

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