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New business growth in Scotland lags UK

23 Apr 10

Scotland is behind most of the UK when it comes to new business start-ups, and that gap could hold back the country’s road to economic recovery, new research has found

The findings come out analysis of the latest data business birth rates, carried out by accountants and business advisers PKF. The firm examined the “business birth rate per capita” which reveals that, while the UK average is 54.2 businesses per 10,000 population, in Scotland this is 38.4. Wales is the only country within the UK with a lower growth, at 38.1.

Martin Gill, Scottish managing partner with PKF, commented: “Scotland has historically always had a lower business birth rate than much of the rest of the UK. This has mattered less when the public sector has filled such a major part of the rest of the economy. The worry is that we are now moving into an era where the public sector is facing serious cutbacks and we do not have the necessary business growth to fill the economic gap.”

As Scotland’s GDP is lagging the rest of the UK the concern, PKF says, is that there is not the capacity in the private sector to drive the required future growth in the economy. With large-scale public sector cuts predicted the relatively low historic performance in business growth does not bode well for an immediate input from the private sector to cover the expected downturn in the economy. The private sector may be unable to fill the impact that the public sector cuts will have on the economy, which could result in the recession lasting longer in Scotland.

However the good news is that the latest figures indicate the bulk of growth is occurring in Scotland’s cities with Stirling at 55.5 leading the way followed by Aberdeen, Edinburgh, Glasgow and Perth at 53.6, 46.5, 43.0 and 40.3 respectively.

Gill added: “Scotland remains some way short of the rest of the UK in the number of new businesses created and that is of concern… In order to ensure we create a dynamic and lively economy driven forward by the private sector we must ensure that the new business growth is encouraged and enhanced. This can be done by examining the areas where growth occurs and replicating this across the rest of Scotland, and by ensuring that there is easier access to funding and appropriate central support for business development.”

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Start-ups | business | birth rate | Scotland | PKF | Martin Gill


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