Number of business start-ups in the region slump
The number of new start-ups in the region fell sharply last year and established firms scaled back their growth ambitions due to Brexit uncertainty, according to new data.
The Black Country saw a fall of 11 per cent on the previous year, from 4,562 to 4,120, while the Marches, which covers Shropshire and Telford and Wrekin, saw a fall of nine per cent, from 2,087 to 1,899.
The findings have emerged from the Enterprise Research Centre’s UK Local Growth Dashboard report, an annual publication that looks at a range of metrics charting the growth of small to medium-sized enterprises (SMEs), which account for 99 per cent of all firms in the UK.
It found that in 2018 – the most recent period available in the ONS’ Business Structure Database – the number of new start-ups across the West Midlands fell by over 4,500, representing a decline of 16.1 per cent on the previous year, from 28,176 to 23,628.
Across the UK as a whole, the equivalent figure was almost 42,000, a decline of 12.9 per cent, from 325,900 to 284,000.
ERC researchers said the slowdown in new firm creation reflected the uncertainty around Brexit, and warned that the ongoing lack of clarity was also blunting growth ambitions in more established firms.
Other key findings for the West Midlands from the UK Local Growth Dashboard report show that firms in the Black Country were the most likely to grow their productivity, by increasing turnover faster than headcount, with 8.5 per cent of businesses doing so. This was slightly higher than the UK average of 8.3 per cent.
Meanwhile, figures also show 61 per cent of 2015 start-ups survived in 2018 in the Marches, while 54 per cent of 2014-start-ups survived to 2018 in the Black Country.
Mark Hart, ERC deputy director and professor of small business and entrepreneurship at Aston Business School, said: “The latest Local Growth Dashboard analysis shows some clear warning signs about the health of the private sector economy right across the UK. It’s particularly worrying that we’re seeing an absolute decline in the number of new businesses being started in the wake of the 2016 referendum and this is a trend we’re also observing in the data for the West Midlands.
“Budding entrepreneurs are clearly holding their breath waiting for some clarity about the outcome of Brexit, but if the trend continues we’ll see fewer jobs created by dynamic young firms.
“And while established firms are clearly still growing successfully in many parts of the country, it’s frustrating that productivity growth still seems to elude the vast majority.
“Taken together, it seems hard to avoid the conclusion that Brexit uncertainty is causing the grassroots economy to stutter. This may not yet have fed through to employment numbers, but policymakers need to be aware of the warning signs and create the certainty businesses are craving.”