Opportunities knocked but UK business start-up rates hold

Figures released at the launch of the 2008 Global Entrepreneurship Monitor (GEM) UK survey today at Aston Business School, Birmingham, suggest there was no evidence of any change in entrepreneurial attitudes or activity in the UK as a whole in 2008, other than a sharp decline in opportunity perception. 

The proportion of people who agreed that there are good opportunities for business start-ups within the next 6 months dropped by almost a quarter between 2007 and 2008. The decline in opportunity perception (35% - 27%) of working age adults, was the fourth largest drop among participating high income countries, after Iceland, Ireland and Spain. On the other hand, UK residents appeared to maintain start-up expectation rates, and skills perception remained steady. Professor Mark Hart of Aston Business School, co-author of the report, commented: “Starting a business requires some commitment, and the start-up entrepreneurs in our sample were probably committed to starting before the downturn in general sentiment hit in late 2008”. 

The report, which drew on identical surveys in 43 countries, established that around 5.5% of working age individuals in the UK in 2008 were actively trying to start a business or running a new business. This is the same rate as the previous year and around the average for G7 countries. On the other hand, 7% of people in the UK expected to start a business in the next three years. This is below the G7 average, and around the same as in Germany (6%) or Japan (8%) but lower than in the US (12%).  By contrast in India and China, around one third of the adult population expects to start a new business in the next three years.

The GEM 2008 survey of 32,000 UK adults was conducted during May to September 2008, before the turmoil in the international banking industry. Dr Jonathan Levie of the Hunter Centre for Entrepreneurship at the University of Strathclyde, co-author of the report, said: “Opportunity perception has taken a knock, but fear of failure does not seem to have increased in the UK as much as in other high income countries, possibly in part because of changes in UK company law in recent years. The recent surge in unemployment means that highly qualified individuals may be considering self-employment who would otherwise not have given it a second thought. We may well see a release of entrepreneurial potential as a result of this crisis.” 

For further information on the UK GEM research project please contact Mark Hart.