Birthrate remains low

Scotland’s business creation rate still lagging behind UK

Andrew McRae

Andrew McRae: more help needed

The growth in the number of businesses in Scotland has failed to keep pace with the UK over the 20 years since the Scottish Parliament was set up.

Figures show the number in Scotland increased by 46% since 1999 when the Scottish Parliament was re-established. However the number of businesses across the UK over the same period increased by 63%.

According to new research from the Federation of Small Businesses (FSB) in Scotland, there were 231,525 businesses in Scotland in the year 2000. The latest set of Scottish Government figures show that there are now 338,110 businesses – excluding non-profits – north of the border.

By comparison, across the UK in 2018 there were 2.2 million more businesses than in 2000.

The FSB has urged Holyrood lawmakers to carefully consider the impact of their decisions on local economies.

Andrew McRae, FSB’s Scotland policy chairman, said: “There are 100,000 more Scottish businesses now than when the new Scottish Parliament first met in May 1999.

“These operators have started up in an environment where a decision made at Holyrood can have as much of an influence on a firm’s success as an announcement during the UK Budget. This means decision-makers in Holyrood have to combine their ambitions for the country with an understanding of how their proposals will work in the real economy.

To grow our business community, we need a steady stream of people prepared to set up on their own

– Andrew McRae

“While UK-wide business growth figures are disproportionately influenced by London and the South-East, Scotland should aspire to drive up both start-up and business survival rates. Building the vibrant and successful Scotland we all want to see requires a flourishing private sector. But to grow our business community, we need a steady stream of people prepared to set up on their own.”

The small business campaign group highlights that between 2000 and 2018, Scotland’s population increased by 7.4% and the UK’s population increased by 12.8% which could partially account for the disparity in business growth rates. FSB says that this underlines the case for a future immigration system which meets Scotland’s needs.

Mr McRae said: “FSB research shows that migrants boost Scotland’s business start-up rate while immigrant business owners alone deliver a £13 billion annual contribution to our economy.

“And we know that some of our most important industries are reliant upon talent and labour from outside of Scotland. That’s why we need to develop an immigration policy which meets Scottish small businesses’ needs.”

FSB also urged the Scottish Government to support smaller firms as Ministers look to reform public procurement and business rates.

Mr McRae said: “Too few Scottish smaller businesses are winning public contracts – and evidence shows this situation deteriorating. Ministers and public sector leaders must take action or see more and more of our taxpayer spending power leave our economy.   

“The Scottish Government has commissioned a review into their vital rates help for smaller firms. This study should focus on the best way to give local operators a helping hand. One of the first things Holyrood did was give extra rates help for smaller firms, we can’t see the rug pulled from these businesses.”

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