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Entrepreneurial Enthusiasm

Like Flora Poste I am not a fan of chaos and look forward to the political scene settling down again, a proper plan being put in place and the media dulling its shrilly hysterical “we’re doomed” message down to the occasional dry squawk. It’s time we got on with things and made the best of it.

It has been a bit dramatic over the last few days but the money markets always bounce around when there’s serious news or a major event. Interestingly the ratings agency Standard & Poor has just reported that in its view the UK will probably not have a full-blown recession over the next two years as a weaker pound cushions the Brexit shock and panic subsides. Its chief economist in Europe Jean-Michel Six said: “We’re not in the Armageddon camp”.

We are becoming one of the most entrepreneurial major economies in the world. By the end of May Companies House showed that there are 3,721,493, businesses recorded in the UK. That’s the highest figure ever recorded. Compare it with only 800,000 companies listed back in 1979.

England’s start up rate is now at one incorporated business for every 17 people. London is particularly vigorous, emerging as one of the world’s hubs for technology.

On the other hand, Scotland has a far lower rate at one company for every 27 people while Northern Ireland has one company for every 34 people.

New businesses are a remarkably good thing and perhaps will become an even more important part of the economy in the new few years. They bring new ideas into faltering sectors, and they embrace and exploit new technologies incredibly fast. As the sand in the shoe of business, they threaten, disrupt, replace and force change to existing business. The force things forward to the next stage. Exciting and uncomfortable, they make things happen and that’s good for all of us.

Start-up businesses large numbers of new jobs. The more start-ups we have, the more jobs will be created. Many young firms exhibit an “up or out” dynamic, in which successful and innovative companies grow rapidly and become a source of job and economic growth, or quickly fail and disappear, allowing capital to be put to more productive uses. In a nutshell new businesses create work and wealth.

While it is true that many of the companies currently registered at Companies House are micro-businesses and won’t grow beyond one person and the kitchen table, some will become much bigger. A few will become significant enterprises and employ hundreds of people. Over the next few months and years, that is probably more important than the terms on which we can export vacuum cleaners to Italy, or whether an insurance company needs an office in Paris to sell policies across Europe.

The business start-up rate will have an impact on the amount of innovation and the number of new jobs far more than anything else. In that respect, the UK is doing exceptionally well, and will carry on doing so whatever is decided as a result of Brexit.

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