By Max Clarke
‘Resilient’ UK businesses are on the brink of recovery, their numbers having grown by over 1%, or 48,000 enterprises, in a year.
This was the news proudly released this morning by the Government’s Department for Business Innovation and Skills on publication of the latest Business Population Estimates report.
“Private sector enterprises will create growth in our economy so it is encouraging to see that the number of businesses at the start of 2010 had increased,” commented Business Minister, Mark Prisk, on release of the figures. “This was a difficult period, and these figures show the resilience of British business.”
Behind the figures, however, a different story emerges: though the number of businesses has indeed risen, two thirds of the increase was driven by a surge in sole trader businesses. At the same time the number of companies with employees actually fell by 34,000 whilst the overall number of registered businesses dropped by 119,000.
Furthermore, the bulk of the increase cited in the BIS’ original release lay in unregistered businesses and the quoted figures are estimates. At the bottom of the 5th page of the report accompanying the release, a note explains:
Most of the change in the number of businesses between 2009 and 2010 was due to an increase in the estimated number of unregistered sole proprietorships.
Such businesses account for 73% of the total number of enterprises though they employ few and contribute less than 10% of Britain’s private sector revenues. Worryingly, such businesses have increased by 78,000 over the same period.
This tendency for the government to be ‘economical with the truth’ is not limited to business. When the Office for National Statistics last month revealed a surprise drop of 0.1% in the nation’s unemployment, ministers were quick to exploit this drop as vindication for the Coalition’s controversial cuts agenda.
Amid the pre-emptive celebrations, another key figure was ‘overlooked’: youth unemployment. The number of 16-25 year olds not in employment had continued to rise, threatening to breach the 1,000,000 mark and pushing the rate to 20%- in line with Lebanon and not far shy of Mubarak’s Egypt.
Another cause for concern that failed to score a mention in this morning’s release lies in the construction industry.
Britain’s construction industry accounts for 1 in 4 private sector businesses, totalling 899,000. The sector, however, is lagging and as yet shows no sign of recovery; declining by 4% at the start of the year.
If decline continues, the number of businesses will inevitably begin to drop. A reduction of 4% of the number of construction businesses equates to 36,000- negating any gains touted by Minister Prisk.