British businesses in trouble - Pace of new businesses slowest since 2010!
Britons started new businesses last year at the slowest pace since 2010, a possible warning sign for long-term economic growth and productivity, according to official data. The number of UK new businesses fell to 316,000 in 2023 from 337,000 in 2022, the Office for National Statistics (ONS) said.
This reduced the "business birth rate" or otherwise the number of new businesses as a percentage of the total number of trading, from 11.5% to 11.0%, the lowest since 2010.
Fewer businesses also closed, with 309,000 closing their doors in 2023, down from 349,000 in 2022, reducing the 'business death rate' to 10.8% from 11.9%, the lowest since 2020.
Many economists see declining rates of business creation and destruction as bad for productivity growth and long-term improvements in living standards, as older businesses often have a harder time adopting better business models or new technology.
Last week the ONS provisionally estimated that Britons' output per hour worked during the third quarter of this year was 1.8% lower than a year earlier and had grown by just 2.0% in the more than four years since the start of the COVID-19 pandemic. These figures are likely to be revised with new population estimates.
The new Labor government has said it wants Britain to achieve the fastest growth in output per head among the world's seven largest advanced economies.
A bright spot in this week's data was an increase in employers with a 'high growth' rating, meaning businesses with at least 10 staff had increased headcount by 20% a year for three years. The percentage of businesses in this category rose to a five-year high of 4.7% in 2023 from 3.9%.
Most start-ups outside of hospitality have only one employee, and productivity gains generally only come as startups grow.
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