UK start-up survival rates at three-year high

The number of British start-ups surviving in business is at a three-year high, according to the bi-annual Barclays and Business Growth Fund (BGF) Entrepreneurs Index.

The index, which tracks entrepreneurial activity throughout the UK, found that the number of active companies in the UK has risen from 3,139,630 in December 2014 to 3,260,879 in June 2015. This rise of 120,249 new start-ups has been the biggest increase since the index began in 2012.

During the period of December 2014-June 2015, the number of company dissolutions dropped from 193,699 to 170,359. It is the first time this has happened since 2012.

Business investments were also on the rise, with the number of deals agreed resulting in wealth creation of at least £200,000 up by five per cent to 1,541.

The economy’s main growth driver remains the service sector, which has been responsible for 21 per cent of investment deals in the year to June 2015. This is followed by financial services (8.3 per cent), computer software (7.2 per cent) and industrial products and services (7.2 per cent).

Dena Brumpton, head of wealth management, Barclays UK, said: “The dip in the number of companies that are dissolving is testament to the growth in business confidence we have seen in recent years, allowing UK businesses not just to start up, but to succeed.

“Since 2012, the appetite for creating new businesses has grown exponentially, due to a number of factors – from an improving economy to the rise of entrepreneurs over the age of 50 – the UK’s start-up scene is thriving.”

While the picture for start-ups was broadly positive, the number of high-growth companies across the UK has actually decreased.

The number of firms with revenues of between £2.5m and £100m has dropped from 21.5 per cent for the 12 months to December 2013 to 20.8 per cent in the year to December 2014.

Stephen Welton, chief executive, BGF, said: “The fact that the first half of 2015 has seen the UK’s biggest rise in the number of active companies since the Entrepreneurs Index began in June 2012, and also the first decrease in the number of these businesses failing is extremely positive.

“[However], we need to continue to invest in ambitious British businesses in order to contribute to the health and robustness of the UK economy.”

Date published 16 Nov 2015 | Last updated 16 Nov 2015