More than £20 billion could be added to the UK economy in future from the number of additional businesses created during the pandemic, fresh data from a joint report by CBI Economics & NatWest Group reveals today (Thursday).
Some 800,000 companies were registered in the first year of the pandemic, a 22% increase compared with the previous year.
Compared with its international peers, the UK is a proven hub for entrepreneurship. Pre-pandemic the number of new businesses created as a share of total firms was 13%, higher than the U.S. (8%) and Germany (11%). Historically, the success and survival of these firms is also well established. In 2018, the one-year survival rate for new business was 89% – around nine percentage points higher than the EU average.
To gain greater insights about the hitherto little-known experience of pandemic-born firms, CBI Economics surveyed 543 firms. Key findings include:
- Only 13% cited regulation as a challenge when starting their business.
- Access to finance was a key concern for many burgeoning business leaders, with 55% highlighting this post 2020, compared with 42% pre-COVID.
- 4 in 5 firms report no plans to wind down their business.
- Pandemic-born businesses are more likely to say it is important to adopt the newest technologies compared to their pre-pandemic counterparts (56% versus 71%).
- Pandemic-born businesses are 20% more likely to use both sustainable materials and suppliers, compared with firms established prior 2020.
Tony Danker, CBI director-general, said: “Pandemic-born businesses – led by ambitious, resilient entrepreneurs – have innovated in so many ways, and at such speed, giving me great sense of optimism. It’s crucial we give these leaders the support they need to grow and succeed.
“Rising energy prices, supply chain challenges, an uncertain economic outlook and cost-of-living crisis mean we’ve some testing months, and possibly years, ahead. For start-ups which count their experience in months, not years, that environment is even tougher. That said, even if the cost of doing business is rising, the cost of starting a business shouldn’t. The UK needs the ideas and ingenuity of entrepreneurs to help us grow.”
Alison Rose, Chief Executive of NatWest Group, said: “A thriving economy is dependent on a flourishing entrepreneurial culture. As we come out of the pandemic, despite rising inflation and the cost of living crisis, now is a great time to start a business and become an entrepreneur.
“There’s more support than ever in terms of access to grants and funding, networking and mentoring and angel investment. And as the biggest lender to businesses, we are determined to play our part. This report helps shine a light on the resilience and determination shown by businesses started during the pandemic. We need to give start-ups the support they need to not just survive, but also to thrive.”
Martin McTague, national chair of the Federation of Small Businesses, said: “The need to adapt and innovate over the pandemic has given us a wave of fantastic new start-ups, from those who turned hobby businesses into full-time endeavours, to established business owners launching new enterprises as the economy changed.
“Firms have emerged from lockdowns to face spiralling operating costs, labour shortages and new trade paperwork. If we want new companies to achieve their full potential, government urgently needs to work with industry to address those challenges.
“The business community as a whole shrank over lockdowns to the tune of hundreds of thousands. Unless action is taken now, that trend could continue as a cost of doing business crisis leaves many fearing for the future.”
