Whisper it, but the UK economy could be showing signs of recovery. 2024 is set to be one of the best years for starting a business in the past half decade with 468,000 new firms having started up in the first half of the year, according to the New Startup Index by Beauhurst.
The UK’s business birth rate has been struggling in recent years. Over 105,000 UK businesses closed in the first quarter of 2023 while just 79,000 new businesses were created, representing the largest net decrease on record.
However, the Beauhurst data, supported by Natwest, could signal the start of a new trend. 248,000 businesses started in the first quarter of 2024 alone; a 43.4% increase since 2020.
Commenting on the data, the new Business and Trade Secretary, Jonathan Reynolds said: “Our mission is to bring economic growth and make the UK the best place to start-up and scale-up business. These figures show signs of optimism for our start-up sector.”
New dawn for UK business
The Beauhurst findings, compiled using data from Companies House, suggest that the UK may be entering a period of recovery after months of financial difficulty. More entrepreneurship can be a catalyst for economic growth and employment.
Official figures show that the UK has recorded the strongest growth in the G7 group of advanced economies since March, largely due to London’s local economy pulling ahead.
There is some regional disparity when it comes to this success. Perhaps unsurprisingly, given its reputation as a hotbed for new business talent, the capital leads the way in 2024 with 161,000 new business incorporations. This is the highest of all regions.
Certain regional startup scenes are also thriving. According to the index, the number of new firms starting up in the West Midlands and Yorkshire grew by 10.1% and 8.15%, respectively.
Crossroads for startups
The rise in the number of new companies being set up comes despite growing costs for UK organisations due to high inflation and energy bills, triggered in part by the pandemic.
While startup growth has surged, government data suggests the total business population has fallen year-on-year. In 2023, there were estimated to be 5.6 million UK private sector businesses. The Beauhurst index suggests this has fallen to 5.47 million in 2024.
Still, the data suggests the UK is at a pivotal moment. Although the overall business population has declined year-on-year, the new cohort of entrepreneurs have the potential to drive economic recovery and job creation across the country.
Paul Thwaite, NatWest Group CEO, said: “Small businesses are the lifeblood of our economy, accounting for three-fifths of employment. If these new businesses are given the right conditions to succeed, they could significantly boost the UK economy.”
Know an exciting new business that was founded in the past five years? Apply for the 2025 Startups 100 Index, next year’s list of the top 100 new businesses in the UK.
