Despite a challenging economic climate, the UK witnessed a remarkable increase in new business creation in the first half of 2023, with an average of 101 new businesses being established every hour, according to a recent study by iwoca, a leading small business lender in Europe.
The analysis of Companies House data revealed that more than 436,000 businesses were registered in the UK between January and June 2023, which marked an 8% increase from the 402,000 new businesses set up during the same period in 2022.
According to iwoca’s Business Hotspots 2023 report, London emerged as the top region for business creation during the first half of the year, with 1,768 businesses established per 100,000 people. The North West region witnessed a significant climb to second place, with 612 new businesses per 100,000 people. On the other hand, the West Midlands dropped to third place, with 574 businesses established per 100,000 residents, after being the runner-up in the previous year.
Scotland was at the bottom of the list, with 365 companies set up per 100,000 residents, and Wales ranked penultimate with 371 new businesses per capita.
The borough of Camden in London recorded the highest number of businesses per capita, with 13,646 new companies per 100,000 residents. This marked an increase of nearly 3,500 compared to the previous year. Hackney and Islington followed closely with 6,383 and 6,241 businesses per capita respectively. Furthermore, all of the top 10 local authorities with the highest number of firms per capita are located in London.
Beyond London, Somerset West and Taunton stood out as the region with the highest number of new businesses per capita, with 1,201 establishments per 100,000 residents. West Suffolk ranked second among regions outside London, with 1,187 new businesses per capita.
The increase in business creation coincided with the highest levels of self-employment since December 2020. Data from the Office for National Statistics (ONS) revealed that the UK had 4.39 million self-employed individuals in Q1 2023, representing an increase of 154,000 compared to Q1 2022. Self-employment had experienced a decline in the previous years but has seen sustained growth since 2022, reflecting a rising trend in entrepreneurship.
The ONS also reported that there were 738,000 job moves in Q1 2023, with resignations accounting for 43% of these moves. This marks an increase from 40% in 2022, indicating that more workers are choosing to leave their jobs and start new businesses in 2023.
Seema Desai, iwoca’s Chief Operating Officer, expressed positivity about the high number of new businesses established during the first half of the year despite economic uncertainties and inflation. Desai emphasized the significance of this entrepreneurial spirit for the country’s economic growth in the coming years and praised the UK as an attractive destination for business.
The analysis conducted by iwoca utilized Companies House data from January to June 2022 and January to June 2023. To determine the geographical distribution of new businesses, complete postcodes were matched with upper tier local authority codes. However, some inaccuracies, incompleteness, or new postcodes may exist due to self-reported data by businesses. Approximately 4% of postcodes were unable to be matched to a local authority and were excluded from the analysis.
Lastly, the City of London was excluded from the analysis due to the disproportionately high number of registered companies in the area, often attributed to the location of legal or registration teams.
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