Entrepreneurial spirit digs in deep into UK’s psyche

London: One in 11 people of working age in Britain are running or starting a business, suggesting the country is becoming the developed world’s capital of entrepreneurship. Some 8.6 per cent of 18- to 64-year-olds are involved in start-ups, compared with 7.3 per cent in 2013, research by Barclays Bank and the Business Growth Fund (BGF) has found.

The biennial Entrepreneurs Index shows the number of active companies in the UK hit a record high of 3.13 million in December 2014 — up 3.7 per cent from June 2014. There are 5.1 million businesses in Britain, but many are dormant.

Richard Phelps, a managing director of Barclays, said: “Since we started our Entrepreneurs Index research in 2012, the UK has seen a net gain of nearly half a million companies, which signifies that for many individuals, running their own business is now becoming an aspirational career choice.”

There was also a rise in founders cashing in by selling some or all of their company. The number of deals resulting in wealth creation of at least £200,000 (Dh1.09 million) rose from 1,476 in 2013 to 1,562 last year — a 6 per cent increase.

There was a big increase in the telecommunications, food, property and pharmaceuticals sectors, while the tech sector saw a 23 per cent drop. The high price of recent tech company flotations has led some to warn of an asset bubble.

There remained a north-south divide. Regions in the south showed an 8.5 per cent increase in business deals recorded during 2014, while there was a slight decline in the north.

The proportion of companies classed as high-growth dipped slightly, from 23.2 per cent to 21 per cent in the year to March 2014. Some of the self-employment is involuntary, as people laid off try their hand as consultants.

Luke Johnson, the serial entrepreneur who chairs StartUp Britain, which aims to encourage entrepreneurship, recently claimed the UK had overtaken the US, where there were 70,000 more company closures than start-ups in 2014. Student debt, the lack of a free health service and the threat of litigation stymied potential founders, he said.

The government’s efforts to promote enterprise include recruiting Lord Young, the former business minister, as an adviser, along with two entrepreneurs in residence. It has handed out more than 140 million pounds in subsidised start-up loans to more than 27,000 people. The UK has also increased tax breaks for entrepreneurs through the enterprise investment scheme and seed enterprise investment schemes.

The UK still does not create enough scaleable businesses, said Stephen Welton, chief executive of the BGF. The fund was set up by the big banks in 2011 to provide long-term investment capital to small and medium-sized companies.

The proportion of VAT-registered companies — those with turnover of more than an £81,000 threshold — among active businesses has decreased from 41.3 per cent in March 2010 to 39.5 per cent in March 2014.

Welton said: “We need to reinforce ambition. Entrepreneurs need to remember why they started their business: how they are going to conquer the world.”

He said the £2.5 billion BGF offered a “combination of capital and support”. Nevertheless, there was still too little long-term growth capital in the UK, he said, and around 90 per cent of money was controlled by managers in London, who missed opportunities in the regions.

Financial Times