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Lockdown leads to record number of new businesses

In the middle of May pubs and restaurants reopened after lockdown. Finally, we could have a drink or a meal inside.

But what was noticeable was the number of pubs and restaurants that didn’t reopen. Speaking on the BBC News, the owner of one establishment gave a very simple explanation: “we cannot get the staff.” After a year of various lockdowns, furlough and uncertainty it would be easy to think people would be queuing up for jobs. The reverse seems to be the case.

One in ten UK restaurants has closed down in the last year. It has been reported that 20% of jobs in the hospitality sector have disappeared. But rather than fighting for the jobs remaining in the sector, it seems that many people have used the last 12 months to rethink what they want from life and work and decided upon a complete change of direction.

Of course, that’s not just confined to the hospitality sector, but the numbers quoted there do show the scale of the problem.

…And, apparently, the opportunity. A record number of new businesses were created during lockdown, as more and more people decided that the change of direction they really wanted was to be their own boss.

You might argue that there was never a worse time to start a business: economic uncertainty, travel restrictions, unable to meet face-to-face. The list is almost endless, but that doesn’t appear to have put people off. More than 29,000 new companies were registered in the UK in September last year, the highest since October 2007 and the third-highest since records began in the late 1980s. New business creation increased month on month from the beginning of lockdown.

Looking at figures for the full year, 835,494 new businesses were registered in the UK last year – a 41% increase on the previous year and virtually double the number registered in 2018.

“British entrepreneurial spirit has been undeterred, despite the challenges of the pandemic,” said a spokesman for Growthdeck, the company which compiled the figures. “People have remained optimistic about starting a business, even in a challenging economy.”

So where are these new entrepreneurs starting their businesses? E-commerce has been the most popular area, with an average of 4,613 online retail businesses set up each month in April, May and June last year, a 66% increase on the same months in the previous year. Second place went to “buying and selling property” and then came management consultancy and “other service activities” including “letting your own property” (where you can suspect the influence of Airbnb).

But who knows? A few years from now a small company’s fund manager might be telling us about a hot new stock they’ve invested in. “Would you believe it? The business started during the pandemic…”