Pandemic hits the rate at which new firms are being created

WALES saw a small increase in the number of enterprises in the first year of the pandemic, according to recently released figures.

The total number of enterprises active in Wales during 2020 was 104,445 – an increase of 675 (0.7%) on 2019. There were 11,905 enterprise births in Wales during 2020, a rate of 11.4%, compared to a UK birth rate of 11.9%.

The business birth rate for Wales is the lowest it has been since 2012 according to StatsWales, with Covid blamed. There were 10,200 enterprise deaths in Wales during 2020, a rate of 9.8%. The UK death rate was 10.5%.

The five-year survival rate in Wales was 40.4%, slightly above the UK rate of 39.6%.

Dr Edward Jones, of Bangor University’s Business School, said: “It does give an insight into how businesses fared during the initial stage of the pandemic.

“The enterprise death rate during 2020 was 9.8% in Wales but 10.5% across the whole of the UK.

“This difference may reflect the different approach taken by governments across the UK relating to the pandemic and support schemes.

“Wales has seen increase in hospitality businesses since pandemic started, but pub and bar numbers fell.

“These rates also reflect what we have seen in GDP. Between January and March 2020 the Welsh economy fell by 2.4% and by 15.1% between April and June 2020.

“For comparison, UK GDP had fallen by 18.8% between April and

June 2020, with the West Midlands (-21.0%) suffering the greatest fall in economic activity.

“What is worrying is the low business birth rate (11.4%) – the lowest is has been since 2012.

“New enterprises are an important driver of the economy and there will be pressure on the Welsh Government to increase this rate as we emerge out of the pandemic.”