One of the real successes of the UK economy since we emerged out of the recession has been the growth in the number of entrepreneurs across the UK with 2.3 million new businesses having started up in the period 2010-16.
However, last week there was some surprising data released that showed a slowdown in the number of business starts for the first time since the financial crisis of 2008/2009.
Business demographic data released by the Office for National Statistics showed that there had been a fall in the number of new business starts of 8 per cent across the UK.
This equates to 147,000 fewer businesses being started in 2017 as compared to the previous year. The biggest falls were to be found in the South West of England (-21 per cent) and the East of England (-19 per cent).
Even London, which has been responsible for a quarter of all UK business starts since 2010, has seen a decline of 10 per cent between 2016 and 2017. Scotland also saw a decrease of 3 per cent and the only English region to see an increase in the number of business starts was the North West of England (13 per cent).
In contrast, Wales (17 per cent) has seen the highest percentage increase in the number of new businesses in the UK with Northern Ireland following closely behind (16 per cent). This means that 2005 more new firms were started in Wales in 2017 as compared to the previous year.
This seems like good news for the Welsh economy but if we dig more deeply into the geographical distribution of entrepreneurial activity, we find an uneven pattern across Wales.
In fact, only five local authorities have seen any positive growth during this period with Newport (141 per cent) and Rhondda Cynon Taff (137 per cent) creating nearly 4,000 new business between them with more modest increase in Wrexham (9 per cent), Gwynedd (5 per cent) and Swansea (4 per cent). The other eighteen councils in Wales have seen a fall of nearly 2,000 new businesses over the same period. Even Cardiff – which is seen as a hotbed for new knowledge-based firms – has seen a fall of 8 per cent in business starts.
As we look to exit the European Union, we need to be creating more new businesses in the UK economy as statistics have consistently shown that it is firms less than five years old that create the majority of jobs in any developed economy, are disproportionately responsible for innovation and create cohesive local communities.
Certainly, these latest statistics suggest that policymakers in Wales will need to identify the reasons for these two outliers in Rhondda Cynon Taff and Newport as compared to the decline in start-ups across the rest of Wales as without their contribution, it would seem that the promised renaissance in the Welsh entrepreneurial economy is stalling.