Why the UK is still Europe’s start-up capital

We make them aware that the UK is a very simple country to set up a business in.

Nilesh Shah
Partner
Blick Rothenberg

For entrepreneurs eager to do business, any regulation is an obstacle. But setting up a business is less painful in the UK than in many other European countries.

It’s certainly quicker.

The World Bank’s ‘Doing Business In 2006’ report, published in December, shows that launching a business in the UK takes 18 days, which is lower than the Organisation for Economic Co-operation and Development (OECD) average.

Even when it comes down to the basics of finding premises and people to work for you, the UK performs better than many.

Flexible labour market an enabler

Not only is registering premises quicker and cheaper than in many OECD countries, but the capital, London, has more fully-serviced offices than any other city in the world.

When it comes to people to do the work, labour market flexibility encourages start-ups in the UK to take on more employees during start-up and growth periods.

Measure the UK’s labour flexibility against the OECD average and the contrast is startling: hiring workers scores 11 on the World Bank’s difficulty index (with 100 representing most difficult), compared with an OECD average of >30.

Fit for enterprise

In short, international comparisons show the UK to have a stable economic framework, low burdens on business and even lower barriers to enterprise.

No wonder so many Britons are entrepreneurs.

The 2005 Global Entrepreneurship Monitor (GEM) – the largest global enterprise measure – found six per cent of 32,500 adults surveyed across the UK already engaged in some form of entrepreneurial activity, which is the highest rate among EU countries and behind only the USA (12.4 per cent) and Canada (9.3 per cent) among the G7 economies.

In fact, the UK’s enterprise rate contrasts with a decline across most G7 economies.

Dedicated support agencies

Once a company decides to set up in the UK, dedicated regional-development agencies and their partners will support it through the necessary but limited bureaucracy.

For example, Business Link, a UK government service, has developed ‘red-tape busters’ to help entrepreneurs set up a business quickly and easily.

Business support services – the UK has a sophisticated infrastructure of corporate lawyers and accountants – can help with the rest.

“Our clients are generally aware of the business environment because they've done their homework,” says Nilesh Shah, a partner with accountants Blick Rothenberg.

“But they might need help understanding the tax system.

“Nine out of 10 of our clients won't know, for instance, that the UK gives favourable treatment to non-UK nationals.”

The 2012 opportunity

Set up in the UK and you’ll have access to opportunities that didn’t exist before – not least 2012 Olympics contracts advertised via a single procurement channel.

In March, David Morton, a senior business manager for Lloyds TSB Business, predicted “a massive opportunity for thousands of businesses to raise their profile and reach new markets” in the run-up to 2012.

Lloyds TSB Business estimates that the Olympics could net the UK £10 billion.

Access to markets

Above all, setting up in the UK gives entrepreneurs access to significant, sophisticated markets.

“Sometimes, clients will have listened to gossip and believe other European countries offer a better location for setting up a company,” says Shah.

“So I ask them: ‘Where are your customers?’

“We make them aware that the UK is a very simple country to set up a business in.”