UK Businesses Continue to Expand Operations, Despite Challenging Economic Environment, Research by iwoca Reveals

Despite a challenging economic environment, 101 new businesses were created every hour across the UK in the first half of 2023, according to research by iwoca, one of Europe’s small business lenders.

Analysis of Companies House data reveals “that over 436,000 businesses were registered in the UK between January and June 2023, an increase of 8% from the 402,000 set up over the same time period in 2022.” ‍

‍iwoca’s Business Hotspots 2023 reveals London “saw the highest rate of business creation in the first half of this year with 1,768 businesses being created per 100,000 people.”

This was followed by the North West “with 612, climbing from third to second place.”

By contrast, last year’s runner-up in new business creation per capita – “the West Midlands – fell to third place this year, with 574 businesses set up per 100,000 residents.”

Scotland came bottom of the list “with 365 companies set up for every 100,000 residents, with Wales in penultimate place with 371.”

Camden saw the highest total number of businesses per capita “out of all UK local authorities, with 13,646 new companies per 100,000 residents – nearly 3,500 more than were registered in the borough the year before.”

The second largest number of firms per capita “were registered in Hackney (6,383) followed by Islington (6,241). London’s local authorities make up all of the top 10.”

The analysis reveals that Somerset West and Taunton “saw the largest number of new businesses per capita outside of London, with 1,201 businesses created per 100,000.”

West Suffolk ranked second of “all local authorities outside London at 1,187 per 100,000.”

The high rate of business creation coincides “with the highest self-employment levels since December 2020. ONS figures show the UK was home to 4.39 million self-employed individuals in Q1 2023 – an increase of 154,000 on Q1 2022.”

While self-employment fell steadily over 2020 and 2021, levels “have seen sustained increases since 2022, suggesting entrepreneurialism is on the uptick.”

ONS figures report 738,000 job moves “in Q1 2023 – 43% of these moves were triggered by resignations.”

In 2022, resignations accounted “for 40% of job-to-job moves, suggesting that more workers are deciding in 2023 to quit their jobs and set up new businesses.”

‍Seema Desai, iwoca’s Chief Operating Officer said:

“It is encouraging to see so many new businesses being created during the first half of this year, despite high inflation and economic uncertainty. iwoca’s Business Hotspots 2023 list shows that the spirit of entrepreneurship is strong across the whole country, with tens of thousands of businesses being created in each region. This will be vital for the country’s economic growth over the next few years, and is a huge vote of confidence in the UK as a place to do business.”

iwoca analyzed Companies House data “comparing business registrations between January and June 2022, and January and June 2023.”

Using the complete postcodes “provided in the data, they have matched these to upper tier local authority codes using a postcode look up.” These include counties, metropolitan counties, inner and outer London and unitary authorities.

Please note that as this data “is self-reported by the businesses, some of the postcodes have been recorded incorrectly, are incomplete, or are brand new postcodes.”

This means there “are ~4% of postcodes which we have not been able to match to a local authority and are not included in this analysis.”

City of London has been discounted, “given the disproportionate number of companies registered in the area, by virtue of their legal or registration teams’ location.”

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