The UK ranks top of thewestern economies for business creation with a 51 per cent increase in the number of new firms over the past five years. The total number of startups has gone from 385, 741 in 2010 to 581, 173 in 2014, according to research from UHY Hacker Young.
Analysing data on its new business registrations over the last five years in 22 countries, UHY Hacker Young found that the UK’s startup rate was second only to China’s which went from 811, 100 firms in 2010 to 1, 609, 700 in 2014.
Western European economies tended to see a bigger increase in the number of new business creations than other developed economies. The UK, Germany, France and Italy all had startup rates above the G7 average of 31 per cent.
The increase in new businesses was 11 per cent for the US, seven per cent in Japan and four per cent in Canada, for the same period.
Colin Jones, partner at UHY Hacker Young, said: The UK is now a leading nation for startups and providing them with the right environment to grow. It has recovered from what were difficult economic conditions and is now a leading nation for encouraging and helping startups.
The accountancy firm said the government has taken steps to reduce the amount of tax due from startups and small companies and to simplify the bureaucratic burden. It reduced the corporation tax rate for small companies from 21 per cent in 2010 to 20 per cent in 2015 the joint lowest rate among G7 nations and plans to cut it to 18 per cent by 2020.
These factors have all contributed to ranking the UK as the best country in the G7 to launch and operate a business. The growth in alternative finance providers and models, including P2P lending and crowdfunding was also cited as a help in improving startups’ access to finance.
It is estimated that at 76bn, alternative lending to SMEs is now equivalent to 46 per cent of the amount of traditional bank loans.
UHY Hacker Young said that to sustain the number of new firms being created, the government could notafford to slow the introduction of more business-friendly policies.
‘small businesses have welcomed the government’s measures to cut their national insurance bills and corporate tax rate, Jones said. The government will need to find a balance in regulating this growing sector to ensure investor confidence while encouraging innovation.
He added that continuing with support such as the Start Up Loans programme is crucial, as well as looking towards cutting red tape where possible, to further foster a positive startup environment in the UK.