Business start-ups drop by over a quarter

Fewer businesses started in the third quarter of 2001 than at any time since mid-1992, according to research published by Barclays.

The 76,900 starts in England and Wales in Q3 of 2001 represent a 27 per cent fall on the equivalent quarter of 2000.

In addition, 94,400 businesses closed in Q3 of 2001, an 8 per cent increase on the same period last year meaning that the business stock contracted slightly over the quarter to 2.74 million businesses. Given that it has declined over the past four quarters, there are now nearly 2 per cent fewer businesses than there were 12 months ago. In Q2 1992, however there were 152,600 business closures.

Regionally, the number of businesses declined most in the North West (down 25 per cent), Wales (down 28 per cent) and London (down 27 per cent) in the first nine months of 2001. The drop in London and the South East (down 18 per cent) may be in part due to a major reduction in the number of Business and Computer Services starts while areas such as the North West, Wales and the South West (down 11 per cent) have experienced the impact of foot and mouth on farmers’ businesses and tourist numbers.

Mike Rogers, Managing Director, Small Business at Barclays, said: “Widespread comment to the effect that the economy is in difficulty has understandably had a major impact on the timing of people’s decisions to start a business. While we are undoubtedly experiencing a slowing of economic growth, talk of recession appears excessively pessimistic at this stage.

“It is not surprising that at a time of historically high employment rates and a likely slowing of the economy, many people are deferring their plans to start a business and staying in salaried employment.” (GB)