The number of people setting up their own business has fallen 20% in the first half of the year, the largest fall for a decade, according to recent research.
Yorkshire and the northeast saw the largest falls, 26% and 28% respectively, while smaller declines were seen in London, Wales and the north west.
“It is not so worrying”, says John Davis, director for small business at Barclays, “the drop seems so large because levels of start-ups have been unsustainably high for the past two years. But the slowing economy is putting people off a bit.” He said potential entrepreneurs were less likely to take the plunge into business when the economic outlook was not stable.
Barclays Bank, which carried out the research, said 197,100 companies started up compared with 246,400 in the same period last year. The findings are based on the number of new accounts opened by Barclays,
A spokesman for the Department of Trade and Industry pointed to the latest official statistics, released last months which showed that at the start of 2004 there were around 4.3m businesses in the UK, up by 260,000. “It is essential that we continue to support new and existing businesses and ensure that they are at the forefront of our efforts for encouraging a sustainable entrepreneurial culture,” he said.
People are more concerned about the impact of the economy in general. The housing market, global oil prices, a downturn on the high street and the rise in bad debts, may be contributing to a wait and see policy, but, in general the drop in start-ups needs to be put in context.
The number of new businesses had reached “unsustainable” levels, said John Davis, and so the 20% fall has to be seen in relative terms.
