Company Formations Hit Record High

Business in the UK is booming, if new company formations are anything to go by, with the number of incorporations rising to 526,874 in the 12 months to March, an increase of 10 per cent on the previous year and the highest figure since current Companies House records began in 1997.

According to the figures, the growth of new firms is spread fairly evenly across the UK, with increases recorded in England, Wales, Scotland and Northern Ireland, although Scotland saw the most incorporations in a year, with 27,602 incorporations between April last year and March 2014, up from 25,454 the year before.

In fact, the start-up creation rate appears to be picking up pace north of the border, with 2,661 new firms incorporated there in March alone, up 10 per cent on the same period in 2013.

There does not appear to be any main reason behind the surge in incorporations, although Government incentives such as the national seed enterprise investment scheme (SEIS) and its £2m equivalent north of the border, called the Scottish Edge fund, which are tax relief programmes for early stage investors, may have played a part.

In addition, the creation of a number of new ‘entrepreneurial ecosystems’ across the UK have undoubtedly helped, as they provide much-needed advice, support and resources for fledgling firms.

However, quantity may not necessarily mean quality, with one commentator noting that a rise in business formation is not valuable in itself if it is made up of individuals working as freelancers rather than consisting of firms with real growth potential.

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