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Brexit fears see business startups drop for the first time since 2010

Tom Belger
·Finance and policy reporter
Photo: Reuters
Photo: Reuters

The number of businesses launched in the UK fell last year for the first time since 2010, according to official figures.

Continued uncertainty over Britain’s future relationship with the EU could be behind the “sharp fall,” according to the Office for National Statistics (ONS).

Data released today show only 382,000 new firms registered for VAT and PAYE in 2017, compared to 414,000 a year earlier. The figures also show a rise in businesses ceasing trading last year, from 288,000 in 2015 to 357,000 in 2017.

READ MORE: Why May’s Brexit trade deal wishlist falls short

London recorded the largest proportion of companies going out of business (14.2%) of any region in the UK, but also had the second largest number of startups (15.2%). The north-west of England had the highest so-called business birth rate (15.9%), with an impressive 78% rise in the number of firms between 2012 and 2017.

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The latest ONS report noted: “Potential uncertainty related to the UK’s future relationship with the EU could have been a cause for the sharp decline in the rate of business births in 2017.

“Depreciation of sterling following the EU referendum result, feeding into higher raw materials and import prices, could have also discouraged birth of new businesses and/or led to deaths of existing businesses.”

The statistics body also highlighted sluggish growth of just 1.7% in the economy as a whole last year despite falling unemployment, compared to an average of 2.1% between 2012 and 2017. It added that the Bank of England’s 0.25% interest rate rise last November was probably too small to have affected business birth and death rates.

BBC business journalist Edward Curwen suggested the stronger growth in north-west startups could be part of the same trend driving record numbers of Londoners to find homes outside the capital.

An analysis by Hamptons International earlier this year found the proportion of home movers ditching the capital in favour of northern England or the Midlands had more than tripled over the past decade.