New figures show that despite the pandemic the number of companies formed in the UK reached a new record high in 2020, writes John Korchak.
In the whole of the UK, there were 780,766 new companies formed – somewhat of a surprise increase from the previous record of 690,763 set in 2019.
Of the 697,446 company formations in England, well over a third – 270,114 – were in London. Scotland added 34,280 new companies, with 19,601 in Wales and 8,477 in Northern Ireland.
A large number of new companies are in the retail sector, set up to sell goods online or locally, and thereby taking advantage of changed shopping habits during the pandemic. Perhaps predictably, there was also a significant increase in the number of businesses offering courier services.
With some businesses – including a few big names – having folded and many employees being made redundant, we’ve seen a number of those people setting up their own ventures as an alternative means to earn a living. If these businesses are to survive, it will be particularly important that these reluctant entrepreneurs seek out and receive sound professional advice.
A downturn in dissolutions
The number of company dissolutions across the UK – 418,427 during 2020 – was the lowest since 2015. The explanation does not appear to be related to the pause placed by Companies House on dissolutions between April and August 2020, as the backlog created seems then to have been cleared in the following months.
It feels more likely that we will again see increased dissolution figures as government support for businesses is withdrawn later in 2021, particularly if that removal is stark and sudden. Once again, good advice from their professional advisers will be essential for many businesses to weather difficult trading conditions, especially in those sectors which might not benefit from the first green shoots of a recovery.
More UK companies than ever before
The total number of UK companies now stands at 4,837,426, up 8.2% in a year. It also represents a 28.7% increase over five years, up from 3,760,093 at the end of 2015.
London continues to dominate the UK company population. Well over 25% of active companies – a total of 1,338,261 – report a registered office address in the capital. Greater Manchester is now home to 207,946 companies with 191,692 in the West Midlands, 137,310 in Essex and 135,276 in West Yorkshire.
This information is drawn from the annual Inform Direct Review of Company Formations, which includes a detailed regional analysis of companies formed and dissolved. You can read the full report at https://www.informdirect.co.uk/company-formations-2020/.
We produce this report each year, bringing together information from Companies House, the Office for National Statistics and our own company incorporation and dissolution data.
• John Korchak, Operations Director at Inform Direct. Call 01473 226482 or go to www.informdirect.co.uk.