Will 2020 be the best year ever for new business creation in the UK?
Using government data, SHL can reveal that 2020 is set to be the best year on record for new business creation in the UK.
We’ve all witnessed the high number of jobs being lost and companies going bankrupt this year, and it is not a surprise to anyone. But has some of this resulted in 2020 being the best year so far to start your own business or go freelance? Tens of thousands of new entrepreneurs think so.
Since June, new business creation has exploded. Based on Companies House data, 2020 is set to be the best year on record for new business creation in the UK. If the current trend continues, by the end of the year we will see the number of new businesses created, year on year, jump by around 12%; the largest year-on-year percentage rise since 2011. That means an estimated 84,758 extra business will be created, throughout the UK than in 2019.
We found that:
- An additional 59,358 new companies were created, in the UK, between June and August compared to the same period in 2019.
- If the current rate of company growth continues, by the end of this year we will see an extra 84,758 companies created this year compared to 2019. This is equivalent to an 12.31% increase year on year, which is the highest percentage growth since 2011 and the highest actual growth on record.
- London has seen the largest growth – up 19.16% year on year.
- Outside of England, the picture is not nearly as rosy, with Scotland, Wales, and Northern Ireland all seeing a reduction in new business creation year on year.
- Sectors experiencing the highest growth in new businesses include e-commerce (up 88%), clothing (up 55%), and retailers of medical goods (likely due to mask sellers) (up 176%). – it is probable that most of these sectors’ growth is strongly related to the pandemic and the lateral effects that came with it.
- Sectors experiencing the largest chilling effect on their growth include vets (down 48% YoY), aircraft repair/maintenance (down 44% YoY), opticians (down 33% YoY), and IT consultancy (down 25% YoY).
We analyzed data for 6,098,962 businesses created in the UK in the last decade, using Companies House data. For each business, we looked at its incorporation date, registered address, and sector. We used these details to find the growth in new businesses per year, per sector, and geographic basis.
2020 has been full of high-profile administrations including Harveys, Monsoon, Victoria’s Secret, and Debenhams. That is before you consider the more than 100k job losses announced across BA (12k), Easyjet (4.5k), Marks & Spencer (7.95k), BP (10k), Rolls Royce (9k), Boots (4k), SSP Group (5k) and others.
Meanwhile, with 1.3 million people on furlough from the end of March (rising to 9.6 million by August), and a historically difficult job market, people were busy creating their own opportunities. In June, when the furlough scheme had its first extension, new business creation started to boom.
At its peak, new business creation in the UK was up a whopping 47% year on year, with nearly 25k more new businesses being created in June 2020 than June 2019.
It is important to note that this boost in company creation is not evenly spread across the country. By far the biggest growth has been in Greater London, where new business creation is up 19.16% year-on-year, in second place in Yorkshire and the Humber with 9.44% growth YoY and in third is the North East with 4.5% YoY growth. Yet, outside England the story is not as rosy with devolved regions seeing reductions; Northern Ireland is down 7.63%, Scotland is down 6.05% and Wales is down 5.93%.
We see similar unevenness across sectors. Winners include:
* These categories would include mask companies.
Clearly, not every sector has seen huge gains. Sectors seeing less new business creation than last year include: