Micro-business numbers surge

The number of micro businesses in the UK has grown by 43% since 2000, a report by insurance group RSA has found.

Micro firms are businesses employing between 0 and 9 workers.

The research found:

• 1.4 million new micro firms have launched since 2000
• micro firms are the only size category to have increased their proportion of UK businesses since 2000
• zero-employee firms are the fastest growing business size
• zero-employee firms have increased 21% since the recession
• 75% of UK businesses were zero-employee firms in 2013.

However, the study also found that the number of high-growth businesses has fallen by a fifth since 2005. 'High-growth' means an average 20% annual growth in employment over 3 consecutive years.

The study reveals:

• medium-sized firms are more likely to have become small (16.5%) than large (3.6%) between 2008 and 2011
• high-growth firms accounted for 5.8% of UK businesses (estimate)
• all regions except London saw decreasing numbers of high-growth firms
• Wales saw the largest reduction, where the proportion of high- growth firms fell by a half
• high-growth businesses in Scotland fell by a third.

David Swigciski, SME trading director at RSA, said:

"The UK has long been regarded as a great place to start a business, but the recent recession has had a significant impact on the business economy, with companies becoming smaller in size. Unfortunately, continuing along this road isn't an option if we want a sustained recovery from the economic downturn.

"Getting back on track and strengthening the economic recovery is a case of redressing the balance between start-ups and growth. This can be done by encouraging investment in growth and helping - as well as ensuring - SMEs reach their full growth potential."

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