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Businesses are born at a slower rate INWALES than in England.

Byline: Claire Miller Senior Data Journalist

BUSINESSES in Wales are being born at a slower rate than in England but births are now outnumbering deaths for the first time since the economic downturn.

In Wales, there were 12.6 businesses launched for every 100 active ones in 2013, compared to 14.1 for the UK as a whole and 14.3 in England.

However, this is the highest rate of births since 2008, and a big jump from 9.4 per 100 in 2012.

The rate at which businesses are dying has also slowed from 11 deaths per 100 active businesses in 2008 to 9.1 per 100 in 2013, which means 2013 was the first year since 2008 when businesses in Wales were being born at a faster rate than they were dying.

Businesses in Wales are also dying at a slower rate than the national average of 9.7 per 100, and 9.8 per 100 in England.

Merthyr Tydfil has one of the highest business birth rates in the country. In 2013, there were 18.1 new businesses launched for every 100 active in the area.

In Cardiff there were 15.4 births per 100 and in Swansea it was 13, the lowest birth rate was in Powys at 8.1 per 100, which is one of the lowest birth rates in the country.

While Powys may have one of the lowest business death rates, those that do launch are more likely to survive.

Nearly half of businesses launched in the county (49.5%) in 2008 were still going in 2013, Ceredigion (51.1%) and Gwynedd (49.4%) saw similar levels of success.

Across the UK, 41.3% of businesses started in 2008 were still trading in 2013. In Wales, 42.5% of businesses made it to five years.

Those in Newport were least likely to make it with a 35.8% survival rate. In Cardiff 41.9% of businesses made it to five years and in Swansea it was 37.5%.

The UK five-year survival rate for businesses born in 2008 and still active in 2013 was 41.3%.

By region, the highest five-year survival rate was in the South West, at 45.5%, while the lowest was in London at 37.1%, which mirrors the churn rate seen in the business birth and death data.

By broad industry, some notably high five-year survival rates include health with a survival rate of 53.4%, and education with a survival rate of 51.7%. Finance and insurance was the lowest, with only 31.4% of businesses surviving for five years.

As economic conditions worsened, the rate of business births began to fall in 2008 on a trend that continued into 2010, from a high of 12.3% to a low of 10.0%. This is likely to reflect uncertainty around the economic outlook at that time and constrained access to finance as the financial sector adjusted to the global shock. The death rate of businesses in the UK fell slightly in 2008 before increasing sharply in 2009, rising above the birth rate. One factor behind this initial fall could be that a number of businesses continued to trade in the expectation that economic growth would resume quickly while benefiting from lower interest rates during this period.

However, GDP growth did not return until 2010, by which time some of those businesses had ceased trading.

The rate of business births returned to a level higher than the rate of business deaths in 2011. This pick-up followed the economy's emergence from the downturn and is consistent with the strengthening of the labour market since the end of 2011, with the employment rate increasing from its trough of 70.1% in September of that year.

These improvements in business birth and death rates mirrored a revival in broader labour market indicators.

The improvements also coincided with a marked rise in the number of self-employed workers, which grew sharply from the middle of 2011. These trends may signal increasing employer and employee confidence, which may in turn have been reflected in the rising birth rate and falling death rate of businesses.

The relatively strong performance of GDP in 2011 and 2013 is reflected in the widening gap between the business birth rate and death rate in these years. The most recent data shows that the rate of business births has risen to 14.1%, its highest level since comparable records began in 2004, while the rate of business deaths has fallen to 9.7%, its lowest level since 2008.

In 2013 the highest rate of business births occurred in business administration and support, at 20.7%. The increase in births in this sector was driven by an increase of 12,000 births in business support service activities. This was followed by professional, scientific and technical, at 17%.

Within the overall number of business births, professional, scientific and technical had the largest number of businesses at 77,000. Within professional, scientific and technical, the largest contributing industry was management consultancy activities, with 29,000 births, an increase of 8,000 on the 2012 figure.

There was also an increase of 5,000 births in architectural and engineering activities and related technical consultancy.

The highest business death rate, at 13.1%, was in finance and insurance. This was followed by accommodation and food services, at 12.7%. Within the overall number of business deaths, professional, scientific and technical had the largest number at 42,000, of which 16,000 came from management consultancy activities, followed by construction at 33,000.

Within the regions, London had the highest business birth rate at 17.9%, followed by the North East (14.7%) and North West (14.7%). Northern Ireland had the lowest birth rate, at 8.7%.

The region with the highest business death rate was London at 10.6%, followed by the North West, at 10.0%. All the regions experienced a decrease in the death rate between 2012 and 2013.

The highest number of births and deaths were in London, at 84,000 and 50,000 respectively.
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Publication:Western Mail (Cardiff, Wales)
Geographic Code:4EUUK
Date:Nov 29, 2014
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