Statistical bulletin: Business Demography, 2010

Headlines figures

• Number of business deaths rose by 20,000 (7.4 per cent) to 297,000 between 2009 and 2010
• The number of business births remained broadly flat with a small decrease of 1,000 (0.4 per cent)
• A fall of 42,000 (1.8 per cent) in the number of active businesses between 2009 and 2010
• For the second consecutive year business deaths have outnumbered business births

Summary

In 2010 there were 235,000 business births in the UK, a birth rate of 10.2 per cent.  This was compared with 236,000 births in 2009, a birth rate of 10.1 per cent.  In 2010 there was a 0.4 per cent decrease in the number of business births.

Provisionally for 2010 there were 297,000 business deaths, a death rate of 12.9 per cent.  This compares with 277,000 business deaths in 2009 and a death rate of 11.8 per cent.  In 2010 there was a 7.4 per cent increase in the number of business deaths.

Business birth and death rates

Source: Office for National Statistics

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There were approximately 2.3 million active businesses in the UK during 2010, a decrease of 42,000 on 2009.  Estimates for 2010 are available in greater geographical and industrial detail from the tables published on the National Statistics website.

Business birth and death rates 2001-2010

Table source: Office for National Statistics

Business births and deaths by broad industry group

In 2010 the highest rate of business births occurred in information & communication with 13.4 per cent.  This was followed by professional; scientific & technical with a birth rate of 12.8 per cent and business administration & support services with a birth rate of 11.9 per cent.  In terms of the overall number of births, professional; scientific & technical created the highest number of businesses at 49,000.  The highest business death rate, at 22.6 per cent, was in business administration and support services.  This was followed by accommodation & food services at 15.7 per cent. In terms of the overall number of deaths, professional; scientific & technical had the highest at 53,000 followed by business administration & support services at 45,000 and construction at 44,000.

2010 birth and death rates by broad industrial grouping

Table source: Office for National Statistics

Table notes:

1. The deaths counts provided in this table are provisional. For more details please refer to the background notes.

Business births and deaths by UK region

Within the regions, London had the highest business birth and death rates at 13.1 per cent and 15.0 per cent respectively.  Northern Ireland had the lowest birth and death rates at 7.8 per cent and 9.1 per cent respectively.  The highest number of births and deaths were seen in London, at 53,000 and 60,000 respectively.  In 2010, all regions had higher numbers of business deaths than births.

2010 birth and death rates by region

Table source: Office for National Statistics

Table notes:

1. The death counts reported in this table are provisional. For more details please refer to the background notes.

Business survivals

The UK five-year survival rate for businesses born in 2005 and still active in 2010 was 44.4 per cent.  By region, the highest five-year survival rate was in Northern Ireland at 54.0 per cent, while the lowest was in London at 39.7 per cent.  By broad industry, some notably high five-year survival rates include health with a survival rate of 58.3 per cent and education with a survival rate of 55.5 per cent.  Hotels & catering was the lowest with only 33.6 per cent of businesses surviving for five years.

Survival rates are available from one-year to five-year in greater geographical and industrial detail via the tables published on the National Statistics website.

Survival rates for businesses born between 2005 and 2009

Table source: Office for National Statistics

Table notes:

1. .. Data not available

Background notes

1. Demography data source

   To support this release a set of reference tables in greater geographical and industrial detail have been produced and are available.

2. Estimates presented in this release and the associated published tables are rounded to prevent disclosure.  Differences may exist in totals across tables due to disclosure methods used.

3. This release is produced from an extract taken from the Inter-Departmental Business Register (IDBR) recording the position of units as at November of the reference year, and excludes central government and local authorities.  The data is produced using the guidelines found in the Eurostat/OECD manual on Business Demography.

4. There are two key differences between this release and the statistics produced by Eurostat.  Firstly, in this release an adjustment has been made to the deaths data to allow for reactivations, which enables more accurate estimates to be published.  Secondly, managed-service companies are excluded from this release, but included in the data supplied to Eurostat. These differences are explained more fully below.

5. Although the statistics in this release are derived from the IDBR, the total stock of active businesses is greater than the UK Business: Activity, Size and Location publication.  This is mainly because the definition of an active business is based on activity at any point in the year, whereas UK Business: Activity, Size and Location is based on an annual snapshot at a point in time.

6. Adjustments to deaths to anticipate reactivations 

   In order to publish estimates within a year of the reference period, ONS has made an adjustment to the deaths figures in this release to allow for reactivations.  Reactivations occur due to lags in the administrative sources (VAT/PAYE), which mean it is possible that a business that is continuing to trade can appear to cease on the IDBR.  If an old VAT scheme is de-registered and there is a delay in the creation and/or matching of the new VAT scheme it can leave the enterprise without a live administrative source resulting in it being automatically flagged as a death.  Additionally, VAT based units where turnover drops to zero are automatically made dead on IDBR, but will rebirth if turnover is then reported in a later period.  These units will appear to move from the active stock into the death counts then come live again as births.  In order to prevent distortion in these figures, those businesses that ‘reactivate’ on the register within two years of death are treated as if they have continued to trade throughout the period.

7. ONS has departed from the Eurostat/OECD manual at this point.  The manual recommends waiting for two years after the reference period to allow for reactivations before deaths are calculated. Instead, ONS has estimated the number of reactivations.  This adjustment has been applied to all industries, by removing units from the death data.  This can lead to different percentage adjustments at the lowest level of aggregation.  Since the level of reactivations is subject to some uncertainty, the latest two years in the publication are considered to be provisional and subject to revision.  The table below shows the adjustments made to the death data for reactivations.

   Table showing adjustment made to deaths figures to account for reactivation of businesses

   Counts given to the nearest thousand

   	Adjusted Deaths 000s	Estimated Re-activations 000s	Un-adjusted Deaths 000s
   2009	277	20	297
   2010	297	18	315

   Table source: Office for National Statistics

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8. Managed service companies

   Managed service companies have been excluded from this release, but are included in the statistics published by Eurostat for Business Demography.  ONS excludes these companies from all outputs because they are registered at the address of a service company provider, and therefore distort the geographical location and industry of the businesses as well as business demography changes.  The table below shows the number of managed service companies excluded in each year.

   Number of managed service companies excluded from business demography

   Counts given to the nearest thousand

   	Active 000s	Births 000s	Deaths 000s
   2005	73	24	8
   2006	95	28	12
   2007	133	51	33
   2008	135	37	54
   2009	79	3	47
   2010	29	2	12

   Table source: Office for National Statistics

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9. Revisions

   The latest two years’ estimates on births, deaths and survivals are subject to revision. Revisions would normally be made in the following year’s publication.

10. National Statistics are produced to high professional standards set out in the Code of Practice for Official Statistics. They undergo regular quality assurance reviews to ensure they meet customer needs. They are produced free from any political interference.

11. Publication Contact Details: Carl Roberts
    Telephone: +44 (0)1633 455169
    Email: carl.roberts@ons.gsi.gov.uk

12. Details of the policy governing the release of new data are available by visiting www.statisticsauthority.gov.uk/assessment/code-of-practice/index.html or from the Media Relations Office email: media.relations@ons.gsi.gov.uk

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