Start-ups down a quarter as entrepreneurial spirit fades

Published on Thursday 11 June 2009 21:38

ALMOST 1,500 fewer Scottish entrepreneurs launched companies in the first quarter of this year than in the same period last year, as the recession further dented business confidence.

The latest figures from the Committee of Scottish Clearing Bankers (CSCB) have revealed that business start-ups north of the Border were down 25 per cent year-on-year. Only 4,166 new companies launched in the three months to the end of March, compared with 5,550 in the same quarter of 2008.

The data, based on bank-account openings, showed that the first quarter figure was also 6 per cent lower than the previous three months, when 4,415 company accounts were launched.

The figures prompted calls yesterday for more government action to encourage redundant workers to launch their own firms.

The statistics are based on new business accounts opened with the four Scottish clearing banks – Bank of Scotland, Clydesdale Bank, Lloyds TSB Scotland and The Royal Bank of Scotland.

The number of new mining and quarrying companies dropped most, down two-thirds on last year to just 15.

Agriculture and fishing businesses also proved unpopular, with start-ups in those sectors slumping by 48 per cent and 56 per cent respectively.

The number of new firms in the hard-hit construction industry was also down, falling 28 per cent on the same period last year.

A total of 542 new business accounts were opened for firms in the construction sector – but business groups warned that many of the new accounts may be as a result of restructuring in the industry, where many companies have slipped into administration.

Some sectors witnessed an increase new business accounts, with the number of education-related companies rising by 37 per cent to 78 in the period.

Geographically, Glasgow reported the most bank accounts being opened, at 466, though this represented a 29 per cent fall from the first quarter of 2008. Edinburgh was close behind, recording 422 new businesses, a 28 per cent drop.

Colin Borland, public affairs manager for the Federation of Small Businesses (FSB) Scotland, said: "The first quarter of 2009 was a particularly difficult period, so it's hardly surprising that people were reluctant to take the plunge and set up in business.

"Since then, though, we have seen some signs that some stability and confidence are coming back."

Borland added that measures such as the Enterprise Finance Guarantee scheme had helped companies through some of their worst cash-flow difficulties.

He added: "But the challenge for government now is to help those people who are ready to create employment, innovation and wealth to reconsider entrepreneurship.

"In addition, those who have recently been made redundant should be encouraged to look at starting their own firm, rather than joining the dole queue."

Iain MacMillan, director of CBI Scotland, said: "The numbers underline the fact that we are very much in a recession."