UK Edition
London sees business creation plummet as devalued pound hits importers
London has fallen into fourth place for business creation in the UK, its worst performance since the Office for National Statistics began compiling the annual survey.
There were a record 102,140 business 'births' in the capital in 2016 – up from 100,920 the previous year – while 82,075 companies closed – up significantly from 64,025 in 2015.
This left London with a net addition of 20,065 businesses last year, equivalent to 3.4pc of active companies in the region and a big reduction on 2015 when the figure was 6.8pc.
It means London now ranks in fourth place among the nine English regions when it comes to net business creation, the first time the capital has failed to secure the top spot since the ONS began the series in 2010.
The East of England recorded the most impressive business creation figures last year with net additions equivalent to 5.4pc of active businesses in the region.
The West Midlands came second on 4.7pc with the North West third on 3.5pc.
London does still lead the way in terms of birth figures but the big increase recorded in businesses shutting up shop in 2016 means that its net score has been dragged down.
In their report the ONS noted that business births have been aided by a strong employment market, sustained growth and low interest rates but cites consumer inflation, the fall in the value of the pound and Brexit uncertainty as reasons why business deaths have accelerated.
The fall in the value of the pound following the EU referendum result may have well have damaged businesses that trade overseas.
Last week separate ONS figures revealed that London and the South East – the two areas where net business creation fell most in 2016 – house close to 40pc of the UK's internationally trading businesses between them.
The gap between business births and deaths is shrinking nationwide
Across the UK the number of business births continued to increase from 383,000 in 2015 to 414,000 in 2016.
However, business deaths grew at a faster rate, increasing from 283,000 to 328,000 over the same period and resulting in a fall in net additions as a proportion of active businesses.
In 2015 the UK added businesses at a rate of 3.8 for every 100 active enterprises but this fell to 3.1 per 100 in 2016, continuing a trend of decline since 2013.
One-year business survival rates also fell in 2016, down to 89.7pc from 92.2pc in 2015 and 93.5pc in 2014.
Finance, insurance and property sectors take a hit
In terms of net business creation the transport and storage industry saw the biggest boost in 2016 with net additions equivalent to 12.1pc of active businesses.
The education industry was second in this regard on 10.7pc, followed by the business administration and support services group on 7.7pc.
At the opposite end of the scale the finance and insurance grouping saw a net loss of businesses in 2016, losing businesses equivalent to 4.5pc of active companies.
The property, wholesale and arts industries all also recorded net losses.