Experts from the School of Economics have released a real-time data report on the rate of businesses creation in the UK, with concerning results.
The Macroeconomics, Growth, and History Centre (MaGHiC) has released the report ‘Missing Firm Creation in the UK during the Covid-19 Lockdown’, analysing real-time Companies House data, up to 30 April 2020, revealing the impact of the Covid-19 pandemic on business creation in the UK since lockdown was implemented.
The report reveals a 32% decrease in weekly business creation, the incorporation of new businesses via Companies House, since lockdown was enforced compared to the same time last year.
The report reveals four key points (as of 30 April 2020):
- UK weekly business creation has decreased 32% since lockdown compared to the same time last year
- 27,518 fewer businesses were created during lockdown compared to this time last year
- The construction and retail sectors have suffered the largest decline in business creation: a 40% fall in weekly incorporations
- Business creation is important for productivity and employment. This decline in the creation of new firms can have important consequences for long-run productivity and employment performance.
The number of new incorporations declined sharply after the third week of March (week ending Friday 20 March 2020), when lockdown measures were implemented strictly.
Dr Anthony Savagar, Senior Lecturer in Economics, said: ‘Entering the crisis, the UK had record high levels of employment, but suffered from weak productivity growth. The fall in business creation will decrease UK employment levels and productivity growth will take a further hit. The productivity point should be a major concern for UK policymakers who are already grappling with the UK’s productivity puzzle.’
The report, ‘Missing Firm Creation in the UK during the Covid-19 Lockdown’, can be found here:
The paper’s authors are:
Dr Alfred Duncan, Lecturer in Economics
Dr Anthony Savagar, Senior Lecturer in Economics
Professor Miguel León-Ledesma, Professor of Economics
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