A record 471,500 new businesses opened their doors in 2007, the highest annual volume since Barclays started tracking the market in 1988. However, closures increased significantly during the same period.
Over the last two decades an average 393,000 new businesses have opened their doors for trading each year, which scaled to the working population, translates to an annual 12 starts for every 1,000 workers. The lowest annual volume of start-ups was recorded in 1992 (280,000) when the economy was experiencing its most severe downturn since 1945.
“It is clear that the past 20 years have seen business formation and enterprise become firmly entrenched, even if there is the odd hiccup in any given year,” says John Davis, marketing director for Barclays Local Business.
“2007 recorded the highest annual volume of business starts, partly driven by an ongoing boom in the construction sector. Over the last year, close to 20 per cent of all starts were construction related, demonstrating that Brits’ obsession with home improvement is far from over. However, we must also recognise that closures increased markedly during 2007, reaching 498,900, an increase of eight per cent on 2006.
“This year expectations are for slower economic growth and a weaker housing market. This is likely to curtail the buoyancy of start-ups. We do not expect further start-up records in 2008, but we do expect the small business sector to be resilient.”