UK start-up economy is booming, says report

A new study by Virgin StartUp suggests that the UK’s start-up sector is thriving, with the number of new businesses totalling 1.2 million, amounting to 40 per cent of all active businesses in the UK.

Start-up businesses, defined in this report as businesses trading for three years or less, are responsible for generating £196bn for the national economy.

UK start-ups also keep more than 3.4 million people in employment and with 366,000 new businesses anticipated for creation in 2016 that figure is only set to rise further.

London is home to the most start-up businesses with almost two-thirds (64%) more new start-ups than the second most active region, the south east of England.

However, the capital is also responsible for the highest number of start-up closures, with the south west and east of England experiencing the highest three-year survival rates for start-ups at 63% and 62% respectively.

Scotland accounts for 6% of all new start-ups, holding its own against other regions such as the East Midlands (6%), West Midlands (7%), Yorkshire and the Humber (7%).

The good news continues for the south west of England with almost a quarter (23.5%) of its start-ups designated as high-growth, driven by a thriving tech hub across Bristol and Bath.

In terms of three-year survival rates for new businesses, both Scotland and Wales boast a higher percentage of start-ups surviving in comparison with London.

The industry which has experienced the most significant growth in the annual creation of start-ups is the information and communication sector, with almost an 80% increase since 2009; closely followed by business services and professional services.

Sir Richard Branson, founder of the Virgin Group, said: “I’ve seen first-hand some fantastic, disruptive businesses, who are making huge progress in their industries.

“Our report shows the fantastic boost start-ups are bringing to the economy. Entrepreneurship truly is alive and well across the UK.

“But an improving start-up landscape is only part of the story as once a business hits maturity and begins to move out of its infancy years, pre-scale businesses find further funding restrictive and difficult to navigate.”

Date published 28 Nov 2016 | Last updated 28 Nov 2016