NI business birth rate still significantly lags behind UK despite significant spending - report

A new report from Ulster University and the FSB has found start-up support programmes launched since the inception of Invest NI in 2002 have not meaningfully increased the north's business birth rate, which has consistently lagged behind other parts of the UK. 
Ryan McAleer

SIGNIFICANT government funding and initiatives to support business creation in Northern Ireland has had no meaningful effect on the rate of start-ups when compared with the rest of the UK, a new report has concluded.

The analysis from the Ulster University Business School and the Federation of Small Business (FSB) found that while the north’s rate of newly created businesses increased by 16 per cent between 2004 and 2019, it has been relatively static since 2014.

During the same 15-year period, the rate of start-ups in England increased by 41 per cent and soared by 51 per cent in Scotland.

A total of 6,625 new enterprises were created in Northern Ireland during 2019.

The ‘Back to the Start-up’ report found that if the north had managed to match the overall UK rate of 39 per cent, it would have created an additional 1,300 businesses in 2019.

It further found that when restricted to indigenous businesses, Northern Ireland creates only half as many businesses per 10,000 people as the UK as a whole.

The period analysed largely covers the lifespan of Invest NI, which was set up in 2002. At that time, Northern Ireland had one of the lowest rates of VAT registrations in the UK - 28 registrations per 10,000 resident adults, compared to 37 for the UK as a whole.

The Ulster University report states “key performance indicators… raise questions about the efficacy of current endeavours”.

It states that total early-stage entrepreneurship activity (TEA) in the north has increased from a rate of 3.7 per cent to 6.6 per cent in the lifetime of Invest NI.

But Ulster University’s report describes the rate as “low” relative tot the UK average, which rose from 5.4 per cent to 9.9 per cent in the same period.

The study has also exposed the significant underrepresentation of women in the north’s start-up scene.

Just one-in-four of the 134,000 self-employed people here are female, with the number increasing by only 17 per cent between 2004 and 2019.

Tina McKenzie, the FSB’s policy chair in Northern Ireland said a step-change is required to create a cultural shift and stimulate more people to consider the option of starting a business, in particular to encourage and reduce barriers for more female entrepreneurs.

She said the implication of Brexit and the Covid-19 pandemic have provided an impetus for change.

“It is often said that doing the same thing over and over again and expecting different results is the definition of insanity.

“In order to cultivate change and reverse the long tail of underperformance in business creation we need to take a different approach to business start-up.

“We must reach beyond those who typically come forward to start a business and begin to stimulate the desire for business creation amongst other parts of society.”

Executive Dean of Ulster University Business School, Professor Mark Durkin said: “This report provides a thorough examination of the current support landscape for business start-up in Northern Ireland and, while recognising that existing support is fairly comprehensive, there is work to be done to make business start-up a societal norm, in the same way we think of looking for a job.

Professor Mark Durkin, Ulster University Business School.

“It is likely that, through no fault of business owners, we see businesses fail because of the economic fallout of the pandemic,” he continued.

“If we are to have a strong economic recovery, it is vital that we re-engage the talents and spirit of these entrepreneurs. In some of the world’s most successful economies business failure is not perceived negatively but, rather, those who have had the courage to bring ideas forward are celebrated.

“To encourage more people to come forward in the future we need to change the mindset around start-up, so that fear of failure does not act as brake on economic growth.

“We hope that this report can be the start of a conversation which encourages people to think differently - to promote and champion entrepreneurship and the wider benefits it brings.”

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