Home Brexit Brexit is not hampering EU entrepreneurs

Brexit is not hampering EU entrepreneurs

by LLB staff reporter
5th May 21 12:01 pm

More than a fifth of all founders of live UK-registered businesses originate from outside the United Kingdom, new research has revealed.

Following the Brexit deadline at the start of 2021, Tide collaborated with DueDil to analyse the contribution of non-UK nationality founders to the UK’s SME sector. As of the end of 2020, more than 1.5 million founders had non-UK nationalities, equating to more than a fifth (21.6%) of all founders of live businesses registered in the United Kingdom. This was split as 827,151 EU nationalities (11.2%), and 771,694 other nationalities (10.4%).

According to data from April 2021, ordered from most to least, the number of founders with non-UK EU nationalities stood as the following:

  1. Irish (109,601 founders)
  2. Romanian (98,343 founders)
  3. Polish (97,152 founders)
  4. German (94,769 founders)
  5. French (69,053 founders)
  6. Italian (67,879 founders)
  7. Bulgarian (36,341 founders)
  8. Dutch (35,059 founders)
  9. Spanish (31,339 founders)
  10. Swedish (25,960 founders)
  11. Portuguese (24,666 founders)
  12. Lithuanian (19,044 founders)
  13. Hungarian (18,315 founders)
  14. Greek (18,025 founders)
  15. Belgian (14,862 founders)
  16. Danish (13,062 founders)
  17. Austrian (9,154 founders)
  18. Latvian (8,459 founders)
  19. Czech (8,159 founders)
  20. Slovak (5,361 founders)
  21. Cypriot (5,5051 founders)
  22. Finnish (4.027 founders)
  23. Estonian (2,647 founders)
  24. Croatian (1,949 founders)
  25. Maltese (1,592 founders)
  26. Slovenian (1,205 founders)
  27. Luxembourger (398 founders)

The top 5 industries for EU founders overall included office administrative, office support and other business support activities (93,285 founders), land transport and transport via pipelines (52,685 founders), retail trade, except of motor vehicles and motorcycles (50,585 founders), computer programming, consultancy and related activities (47,261 founders), and specialised construction activities (44,156 founders).

The data also showed that, instead of seeing a contraction in the numbers of EU natives starting businesses in the UK there has been an increase each year since we voted to leave the EU. To get a relative view of how the Brexit decision impacted non-British business owners registering their businesses in the UK, the research analysed how many non-British founders there were over the last 5 years (2017 to 2021) to see if growth figures fluctuated since the referendum.

Looking at each year since we voted to leave the EU, the European founder figures stood at the following numbers:

2017 2018 2019 2020 2021
EU founders (incl Irish, excl UK) 558,044 617,902 682,549 747,721 821,472
EU founders (excl Irish, excl UK) 469,668 524,225 583,511 643,593 711,871

In the last five years, seven EU nationalities have seen the biggest growth in creating companies in the UK: Irish, German, Polish, Romanian, French, Italian, and Dutch. Of these, it was Romanian (+144.5%), Polish (+56.3%), and German (+12.5%) nationalities which saw the highest growth since 2017*:

Highest growth deep-dive – Romanian

Most (48%) Romanian founders are in the 30-40 year-old age bracket – almost 1 in 5 (19%) are younger than 30, and a third (33%) are aged 50+.

The top 3 industries for Romanian founders, as of end of 2020, include:

  1. Land transport and transport via pipelines (20,549 founders)
  2. Construction of buildings (13,019)
  3. Specialised construction activities (11,592)

Land transport and transport via pipelines took the top spot – this division includes the transport of passengers and freight via road and rail, as well as freight transport via pipelines (mostly used for transport of crude and refined petroleum products such as oil and natural gas).

Highest growth deep-dive – Polish

Similar to Romanian, the majority (40%) of Polish founders are in the 30–40-year-old age bracket, closely followed by the 40-50 age bracket (35%) – less than 1 in 10 (8%) are younger than 30, and 14% are aged 50+ bracket.  The detailed analysis of nationalities shows that among the Polish, the gender disparity among founders is somewhat lower than normal – as of the end of 2020, 71.5% of Polish founders are male, compared to 23.1% female (5.4% are unknown).

The top 3 industries for Polish founders, as of end of 2020, include:

  1. Land transport and transport via pipelines (16,080 founders)
  2. Retail trade, except of motor vehicles and motorcycles (8,034)
  3. Specialised construction activities (7,658)

Highest growth deep-dive – German

German founders are building businesses in different industries compared to their Polish and Romanian peers, and they tend to be older – the majority (30%) of German founders are in the 50–60-year-old age bracket – followed by 40-50 (22%) and 60-70 (18%). Just 15% are aged under 40, and 1 in 10 (10%) are aged 70+.

The top 3 industries for German founders, as of end of 2020, include:

  1. Office administrative, office support and other business support activities (37,230 founders)
  2. Other professional, scientific and technical activities (4,205)
  3. Computer programming, consultancy and related activities (3,779)

Justin Fitzpatrick, CEO at DueDil, commented, “Brexit has been an all-encompassing and powerfully divisive issue ever since the announcement of the referendum. The business community has grappled with mixed forecasts about Brexit’s impact from think tanks on both sides. Using insight from the DueDil Business Information Graph (B.I.G.)TM we analyzed the contribution of EU nationals to entrepreneurship in the UK from the referendum’s announcement to the present.

“The data is clear… We see strong and consistent increases in the numbers of EU nationals resident in the UK who are starting businesses here. We are immensely proud to be partnering with Tide to make it easier for these founders and entrepreneurs to open a business account as seamlessly as possible and keep the SME economy thriving”.

Liza Haskell, Chief Administrative Officer at Tide, added, “Contrary to what one might think, Europeans did not react to the prospect of Brexit by ceasing to come to the UK and set up businesses. Overall we do not (yet) see a decline in founders from EU countries, rather, there has been an increase in the number of EU founders each year. This correlates with the growing number of UK companies.

“The UK is a great place for small businesses – despite the global coronavirus pandemic company formation saw a boom in 2020, with 768,777 new incorporated companies setting up with Companies House, as compared to 678,419 incorporations in 2019. SMEs are going to be crucial to the UK’s economic recovery, and it’s encouraging to see that people from the EU still want to set up and operate here.

“Tide is committed to supporting diversity and inclusion, and by the end of 2022 we will help at least 50,000 women and 20,000 people from a diverse range of backgrounds get started on their entrepreneurial journey. With Tide, business owners can register a limited company and open a business account, all in one go, for free. It only takes minutes to apply, and you can have your certificate of incorporation within hours*. We even pay the £12 incorporation fee on your behalf”.

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