Business formations recover to reach new high in 2018

The latest Companies House data, as analysed by the Centre for Entrepreneurs (CFE), shows that business formations recovered from a drop in 2017 to reach a record 663,272 in 2018.

“It is encouraging to see formation numbers recover and hit a new high,” says Matt Smith, director of the Centre for Entrepreneurs. “These figures demonstrate the resilience and confidence of entrepreneurs across the country, confirmed by a 5.7% increase of business registrations and the strengthening of London as Europe’s leading startup hub.”

The record year follows a 4.6% drop in business rates in 2017. The Centre attributed this decrease to the clampdown on ‘disguised employment’ among public sector workers, with notable impact in Bedfordshire, Wiltshire and Cheshire East, where contractor accounting firms previously had a distortionary effect on genuine local business formation figures. 2018 saw a continuation of the clampdown by the government. For instance, Wiltshire recorded a decrease from 10,164 formations in 2016 to 2,778 in 2018 – a figure more in line with similar rural areas.

“Despite the drop in contractor accounting firms from a peak of 50,000 formations in 2016 to 16,000 last year, 2018 still saw record formations across the UK and suggests a rise in more legitimate business creations, which should be celebrated,” explains Smith.

London continues to dominate entrepreneurial activity; business formations increased by 5.2% to 216,204. Meanwhile, Birmingham rose from fifth to third in the index, with 18,590 business formations recorded in 2018 – up from 13,165 enterprises created in 2017. In Scotland, Glasgow and Edinburgh both saw a drop of business formations over the course of the year; nevertheless, Glasgow cemented its three-year lead over Edinburgh as the business hub of Scotland, with 6,396 businesses started compared to 5,439 in the Scottish capital.

The Centre’s fifth annual analysis of company formations confirms the UK’s position as an established entrepreneurial nation. “As the UK prepares to leave the European Union, the government needs to reassure entrepreneurs that it will continue to champion and support them,” says Friederike Andres, research assistant at the Centre for Entrepreneurs. “This includes efforts to mitigate any negative effects from EU exit, as well as tangible measures to reform business rates, boost SME procurement and tackle other underlying issues.”


The data – listing the performance of all local authorities – can be downloaded here. The methodology can be found in the notes section of the data spreadsheet.

Media contact
Laura Moross
+44 (0)7969673895

Research contact
Friederike Andres
Research assistant, Centre for Entrepreneurs