Entrepreneurship in the UK is largely being sustained by surging self-employment, with too few companies with growth aspirations being created, a new report has warned.
The latest Global Entrepreneurship Monitor has revealed a decline in all stages of entrepreneurship in the UK from 24 per cent to 20 per cent between 2012 and 2013.
While the UK is still outperforming most of its European rivals on almost all entrepreneurship indicators, the report’s authors highlighted a lack of ambition among British founders.
The UK lags behind France, Germany and the US in the proportion of early-stage entrepreneurs expecting to create a significant number of jobs, and just 4 per cent of UK start-ups reach annual revenues of £1 million within three years, the research found.
Mark Hart of Aston Business School, one of the report’s authors, said: “We don’t have a start-up problem, we have a growth problem. The proportion of start-ups getting to £1 million turnover is minuscule.”
Professor Hart believes that the problem is largely down to a disproportionate amount of the UK’s “entrepreneurial activity” being related to self-employment, which is at a record high in the UK. One in seven of the workforce is now self-employed.
The number of self-employed people increased by 337,000 between February and April, compared with the same period a year earlier, to stand at 4.54 million, according to the latest set of figures from the Office for National Statistics.
The report also found more people than ever were starting a business after the age of 50, while entrepreneurship among the young has declined slightly. Older people were launching their own businesses “predominantly out of opportunity rather than necessity”, the researchers said.
“These are not people who are past retirement, but individuals with years of productive activity in front of them, and their move into the ranks of entrepreneurs opens an interesting new aspect within the UK’s business culture, both socially and economically,” Professor Hart said.