Centre for Entrepreneurs' latest analysis shows that there is ongoing evidence of the ‘COVID economy’
According to the Centre for Entrepreneurs’ seventh annual analysis of Companies House data, business formations grew by 14 per cent in 2020 to reach a new record of 772,002.
“These figures should be welcomed,” said Matt Smith, director of policy and research at the Centre for Entrepreneurs. “The pandemic has unleashed a wave of entrepreneurship across the UK, with people testing new ideas and responding to new demands.”
2020 was a year of highs and lows. January saw 0.6 per cent fewer businesses launched than in 2019. By April as lockdown took hold, formations had fallen 29 per cent year-on-year (with Scotland and Northern Ireland down 45 per cent). By June, all nations returning to year-on-year growth, averaging 47 per cent 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 per cent 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 campsites, chalets, guest houses and B&Bs launched to cater for UK holidays.
“2020 was an incredibly difficult year for businesses, but these figures show the resilience and determination of Britain’s entrepreneurs to drive the recovery,” said Smith.