Domestic business incorporation shows good recovery

06/07/2010

Figures for business formation in the UK are starting to rise again after two years of plummeting numbers, Companies House has indicated.

The number of new companies registered in the UK during the 12 months to March this year rose by 10 per cent to 362,317.

The rise followed the record falls of the two prior years, when new incorporations fell by 11 per cent in 2008/09 and 17 per cent in 2007/08.

However, the fact that more names are being registered is a 'reflection of increased confidence about future prospects,' according to Roger Williams, a partner at accountancy firm Wilkins Kennedy.

"Hundreds of thousands of people have lost their jobs since the banking crisis started, but what we are now seeing is that many of those have dusted themselves down and are starting up their own business," he said.

The favourable business incentives announced in the emergency budget – including the amendments to corporation tax – have meant that Britian is becoming a more favourable place in which to incorporate a business.

Other trade bodies have warned, however, that the figures do not represent a done deal for economic recovery.

R3, the trade body for insolvency practitioners, noted that financial recovery often leads to increased insolvencies.

They said many businesses find that, with operations pared back to cope with a recession, they soon run out of money to service rising orders.