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How UK Businesses are Performing
Naturally, that means we take a vested interest in industry growth, business developments and budding entrepreneurs.
Because we work with thousands of business throughout the UK, we naturally notice changing trends, especially business consumer habits. This piqued our interest, and got us asking: how do different industries perform in the UK? Which regions have seen some real success stories in the last year or so?
To keep track of all those changes, we put together an interactive map of UK business. It uses the latest government data to show how businesses are performing in each region. With it, we can see:
- Where business is thriving
- Where businesses are in decline
- Where businesses make the most money
We’ve also dug deep into the data to find some of the most interesting developments in UK business over the last few years.
Below, we explore why certain regions are thriving, which industries are on the rise, and why there’s plenty of reason to be optimistic if you’re an employer in Britain.
Note: The data used for the below content was taken from a range of different reports. Some of these reports include data for 2018, whereas others do not. Therefore, some of the date ranges used may differ. We have, however, used the latest available figures in every instance.
Where is business performing well and where is it struggling?
The North West dominates for new businesses
The most recent government report (late 2018) shows that the North West currently has the highest rate of business births of any region in the UK. In the North West, 15.9% of businesses were founded in the last year, ahead of London (15.2%) and Wales (13.7%).
In England’s ‘second city’, Gross Value Added (GVA) and employment grew by an incredible 3.8%, and 16,300 jobs are expected to be created by 2021.
Between 2016 and 2017, the North West was the only region in England in which the number of business births grew (see graphic below). The number of new businesses per year increased by 13%, versus an average of -13% change for the rest of England. It was bested only by Wales and Northern Ireland, which grew by 17% and 16% respectively. Business births in London decreased by 10%.
Business in Wales and Northern Ireland is booming
Businesses in Wales and Northern Ireland have the highest and second-highest rates of growth year-on-year respectively. Though neither economy is as expansive as the North West, each region has been bolstered by increased demand and strong business survival rates, creating thousands of new jobs.
The growth in Wales has been aided by the Accelerated Growth programme, a scheme developed by the Welsh government to boost the local economy.
In Northern Ireland, significant growth in the services sector — driven by tourism and manufacturing exports — has strengthened the region, making it an attractive prospect for future investment.
While London is still the UK’s capital of business in terms of the sheer number of companies set up there, high living costs and a relentlessly competitive market-place are making it increasingly difficult for businesses to survive.
The business death rate in London is the highest in the UK. 14.2% of businesses operating in London have to shut down each year, where only 12.2% of businesses close.
Between 2012 and 2017, the number of business deaths in London per year jumped by 71% from 50,200 to 86,000. Worse still, business births in the capital actually decreased by 10% between 2016 and 2017.
The industries struggling the most in London are health — in which twice as many businesses closed in 2017 as opened — and transport and storage, which includes logistics and postal services.
How are industries changing?
Fewer businesses are being founded overall
There were fewer business births overall in 2017 versus 2016, the first time there’s been a negative year-on-year change since 2012.
Evidence suggests that there’s been a softening in business investment since 2016, which is likely to have impacted the viability of new enterprises in the UK.
There’s also more uncertainty about the future of UK business following the EU referendum; UK entrepreneurs could be awaiting a more stable economic climate before launching their next business.
Transport and storage services are key to Northern business growth
While transport is struggling in London, it’s thriving in the North West. There are 15,590 businesses in the North West that fall into the category of transport and storage, 24% more than the 12,590 currently in Greater London.
The growth of new UK transportation businesses peaked in 2016 at 15,075 businesses born, a jaw-dropping increase of 193% versus 2012.
Within the sector, it was freight transport by road that grew the fastest by far, skyrocketing by 229% between 2012 and 2016.
2017 saw the industry in a downturn. For the first time in five years, the number of business closures in the transportation and storage sector outnumbered births. Whether this is an outlier or the beginning of a longer trend remains to be seen.
Construction is laying strong foundations
There were an additional 30,000 construction businesses in 2018 than there were in 2016, a growth of 10% in just two years. The construction industry now accounts for 12.4% of all UK business.
The UK government notes that construction output reached an all-time high in November 2018, exceeding £14 billion for the first time since monthly records began in 2010. The increased output was aided by strong growth in private new housing, private commercial new work, and public housing repair. This correlates with the government’s pledge to build 300,000 new homes every year to alleviate the housing crisis.
Professional and business services dominate throughout the UK.
The most popular business sector is Professional, Scientific and Technical. This is consistent throughout each region, with the only exceptions being in the North East, Wales, and Northern Ireland.
Professional, scientific and technical businesses are the largest broad industry group; today, they represent 17.5% of all registered businesses in the UK.
In the last year, professional services have had the second highest birth and death rates of any industry. It is arguably the country’s most competitive industry at the current time.
The energy industry continues to grow
2015 was a turning point for the energy sector, particularly for renewables. It’s a chain reaction that started all the way back in April 2010, when the government’s Feed-in Tariff for solar panels incentivised thousands of people to switch to renewable energy.
By 2015, solar energy was widely available, which prompted a boom in renewable energy enterprises; that year, renewable energy represented more than half the new power capacity around the world, reaching a record 153 Gigawatts in power produced.
As a result, today’s renewable energy is dramatically cheaper than it was before 2015.
Though 2016 and 2017 were not quite as dramatic for energy business births, they still outnumber deaths, meaning there is consistent growth within the energy industry.
Last year showed great promise for new energy businesses. 2018 marked a 10% drop in profits for the ‘Big Six’ energy companies (British Gas, Npower, SSE, ScottishPower, EDF and E.ON) as 1.4 million UK customers switched their energy supplier. The growth in the industry has hugely benefitted consumers, who now have more choice and more competitive prices year on year.
What does the future look like?
Though the future isn’t clear for UK businesses, it’s promising to see some industries continue to flourish.
The boom in industries like transport and construction show that UK infrastructure is preparing itself for growth.
At Love Energy Savings, we’ll continue to champion UK business no matter what the situation. It’s reassuring to see that, right now, things are looking up.