A competitive tax system, business friendly regulations, skilled workforce and dynamic financial markets have given the UK its edge and seen spending on Research and Development exceed the G20 average, according to a report by accountants EY.
Domestic credit in the private sector, as a proportion of GDP, was almost double the G20 average – 209.5 compared to 99 in the G20.
However, the report, which has been launched ahead of the G20 Leaders Summit, warns that greater collaboration is needed between Government, business and entrepreneurs if the UK is to retain its leading position. Other countries considered top for entrepreneurship are Australia, Canada, South Korea and the US.
EY’s G20 Entrepreneurship Barometer is based on a survey of over 1,500 entrepreneurs – including 55 from the UK – plus quantitative data on entrepreneurial conditions and EY research into more than 200 government practices. Countries were then ranked on funding, culture, tax and regulation, education and training, and coordinated support.
No room for complacency
Stuart Watson, Partner at EY’s said: “The foundations for a strong entrepreneurial ecosystem are already well established in the UK, with fast growth businesses accounting for nearly 60 per cent of all new jobs. Targeted incentives for investment and research and development; one of the lowest corporate tax rates in the G20 by 2015; and positive interventions like Funding for Lending; all help send a clear message that Britain is open for business.
“But we shouldn’t be complacent and can’t rely purely on Government. Domestic demand is set to remain fragile for some time yet, uncertainty still hangs over the Eurozone, while the emerging growth markets are catching us up – Russia scored highest in the Barometer for ‘coordinated support’.
"Government and business will need to work closely together to maintain a competitive financial and regulatory environment and develop an entrepreneurial culture in every aspect of business life.”
The UK scored highly on access to funding. However, long-standing concerns about the flow of credit remain. Seven out of ten UK entrepreneurs described access to funding as difficult and 75 per cent reported that access to bank loans had deteriorated over the past three years.
Iain Wilkie, from EY said: “The Regional Growth Fund and Funding for Lending are starting to have a positive impact, while new sources of financing such as crowd funding are becoming more readily available. But there are clearly still challenges for entrepreneurs on the ground. There’s a real need for more innovative financing to service every stage of the business life cycle, to take companies from fledging start-ups through to rapid growth and maturity.”
The level of support entrepreneurs receive in the UK is also perceived to be slipping. The UK received its lowest score in the Barometer for ‘coordinated support’ from mentors, networks and business incubators, ranking just 17th amongst the G20.
While one in two entrepreneurs surveyed across the G20 said that access to business incubators had improved over the past three years, only half as many felt the same in the UK. Forty-five per cent of those surveyed in the UK named business incubators as the top initiative to boost the long-term growth of entrepreneurship in the country.
Mr Watson said: “The solution lies in the hands of business not Government. Cambridge and the Silicon Roundabout are great examples of business communities that have formed clusters of expertise, where companies collaborate but are still able to compete. They are hotbeds of innovation, but we need to see these models replicated across the country rather than existing in isolated pockets. It’s time for UK PLC to step up.”
According to the report, Government support for innovation through the tax system, business awards, and the rise of popular TV shows such as Dragons Den and the Apprentice have helped to foster an entrepreneurial culture in the UK. Seventy-one per cent of entrepreneurs surveyed felt the UK had a culture that encourages entrepreneurship, compared to the G20 average of 57 per cent.
Mr Watson said: “There has been a real shift in the perception of entrepreneurs over the last 10 years. The advent of popular TV shows and well known business personalities has undoubtedly had an impact on the number of young people who now list ‘entrepreneur’ as a career aspiration".
But there is room for improvement. Just 13 per cent of UK entrepreneurs said that business failure is perceived as a learning opportunity in the UK, compared to the G20 average of 23 per cent.
Mr Watson concluded: “Over 400,000 new businesses are set up every year but over a fifth fail within 12 months. To become a truly entrepreneurial culture, the UK needs to adopt more of the US attitude, where business failure is seen as a learning experience and something that can be recovered from, rather than a barrier to future business aspirations.”
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Susie Hughes © Shout99 2013