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Surge in start-ups but growth challenges remain

20 Apr 2015

The number of new start-up businesses has surged in recent years, but many are struggling to grow and expand, a new study suggests.

According to the latest Entrepreneurs’ Index, the number of start-ups grew by 3.7% in the second half of last year, taking the total number of active companies in the UK to nearly 3.14 million.

However, analysts claim that businesses are facing difficulties in moving up to the next growth bracket, with the proportion of firms in the £2.5m to £100m revenue bracket falling from 23.2% to 21%.

The number of companies registered for VAT has also declined, falling from 41.3% to 39.5% last year.

Experts say this suggests that start-ups are either choosing to stay small, or are struggling to grow their turnover above the VAT registration threshold.

Richard Phelps, head of corporate and employer solutions at Barclays, said: ‘Our research clearly shows that the UK has reignited the entrepreneurial flame, evidenced by a strong and healthy start-up scene.

‘However, we believe there is more to be done in fostering high growth companies and helping these entrepreneurs to realise their growth ambitions if the economy is really going to benefit from this entrepreneurial spirit.’

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