By Claire West

Data provided by Simply Business shows that the UK’s start-up sector has experienced a fragile recovery in 2010, with the first increase in the start-up rate for three years.

In 2010, start-up companies less than a year old represented 47.1% of Simply Business applications - an annual growth rate of 1.4%. This compares with declines of 5.5% in 2009 and 4.5% in 2008 as the effects of recession led to a sharp fall in the number of new companies being launched.

The 2010 data is based on 220,000 individual requests for insurance quotes, providing unique insight into the condition of the UK’s small business community. A 2010 report by the Ernst & Young ITEM Club calculated that start-ups were responsible for 20% of all new jobs created between 2005 and 2008, making them vital to the UK's recovery prospects.

The data also shows a very uneven picture across different sectors and regions.

Professional services growing. Property, engineering and construction declining. London only fast-growing region.

While the start-up rate for professional services including IT, Management Consulting and Financial, Insurance and Legal services has increased dramatically in 2010 compared with 2009, it has declined markedly in Architecture, Engineering and Heavy Construction.

The regional picture is similarly mixed with London the only region which has demonstrated strong growth overall in 2010, with a 7% growth in start-ups. The West Midlands was the worst performing region, with a 3% fall.

Start-up success:

Sectors in which the start-up rate has grown most strongly in 2010 (percentage increase compared to 2009):

Computer/IT 12%
Management consultant 9%
Financial/Legal/Insurance 8%
Advertising/Design 7%
Start-up strugglers:

Sectors in which the start-up rate has declined most significantly since 2007 (percentage increase compared to 2007):

Architects/Surveyors -27%
Engineers -24%
Heavy construction/tradesman -18%
Property -12%
The regional picture: London de-coupled from rest of UK. Growth hotspots in Scotland, Northern Ireland, Wales, North West and North East

London is the only region which has demonstrated a strong upswing in start-ups overall in 2010. With the exception of heavy construction, London has performed strongly across every sector, particularly in property-related industries, including a 77% upswing in Architects and Surveyors and a 31% upswing in property services companies.

The rest of the country has seen little increase in the start-up rate in 2010 overall, but the figures reveal some regional start-up cluster growth, including in the North West, where the anticipated opening of MediaCity in 2011 and the arrival of the BBC have prompted a 10% upswing in advertising, design and digital media start-ups.

Other hotspots in 2010 include:

Scotland had the highest upswing in IT start-ups: 28% growth
Wales had the highest upswing in management consultancy start-ups outside London: 24% growth
The North East had the highest upswing in financial, legal and insurance companies outside London: 12% growth
Northern Ireland had the highest upswing in medical and healthcare companies: 67% growth