As someone who has been involved in studying entrepreneurship for thirty-five years, I always look forward to the publication of the Global Entrepreneurship Monitor (GEM) for the º£½ÇÊÓƵ, especially given I was involved for several years in writing specific reports for Wales.
Established in 1999 by Babson College and London Business School, GEM has provided valuable insights into the entrepreneurial journey of the º£½ÇÊÓƵ over the past 25 years and this year’s report from the Enterprise Research Centre creates an opportunity to look back over that period to examine whether entrepreneurship has changed in the º£½ÇÊÓƵ and, more importantly, what needs to be done to make it better.
The first GEM survey in 1999 revealed that the º£½ÇÊÓƵ had a relatively low perception of opportunities for new start ups, with only one-third of respondents expressing a willingness to start a business if a good opportunity arose. Over time, this perception has improved despite setbacks during economic downturns such as the financial crisis of 2008 and the Covid pandemic.
Fear of failure has remained a significant barrier, particularly for women, who are more likely to report this as a concern compared to men. For instance, 60% of non-entrepreneurial individuals in the º£½ÇÊÓƵ cited fear of failure as a reason for not starting a business, a figure that remains high across the US, France, and Germany.
Despite challenges, the º£½ÇÊÓƵ has become significantly more entrepreneurial since the turn of the millennium. In 2023, nearly 30% of working-age individuals were either planning to start a business, actively trying to start one, or already running their own, double the rate recorded back in 2002.In recent times, the Covid-19 pandemic played a role in this shift, prompting many to reconsider their careers and explore entrepreneurship as a viable path.
Women’s participation in early-stage entrepreneurial activity has seen a remarkable increase, tripling from just over 3.5% in 2002 to 10% in 2023, reflecting broader societal changes and the increasing acceptance of women in business roles traditionally dominated by men. However, this is still below the rate for the USA of 18%, highlighting the need for continued support and policies to boost female entrepreneurship in the º£½ÇÊÓƵ.
Ethnic minority groups, particularly Asian, Caribbean, and African communities, have shown higher rates of entrepreneurial activity compared to their white counterparts. Given the important role that those entering any nation play in terms of starting and growing new businesses, the study shows that immigrant entrepreneurial activity rates are 1.6 times higher than those of º£½ÇÊÓƵ-born residents. Changes in immigration policy, especially post-Brexit, have influenced these trends, making it crucial to create a welcoming environment for diverse entrepreneurial talent.
Another significant trend identified in the study is the rising interest in entrepreneurship among young people. Evidence shows that the early-stage entrepreneurial activity rate for individuals aged 18-29, which remained stable at around 5% for the decade leading up to the 2008 financial crisis, more than doubled to just over 13% in 2023.
This clearly represents a major shift in young people’s engagement with entrepreneurship and was especially notable after the pandemic as more young people began to reevaluate their career choices, making starting a new business more popular than ever. There also seems to be evidence of a two-speed entrepreneurial economy with London standing out with significantly higher rates of entrepreneurial activity compared to other regions, driven by its diverse population and better access to entrepreneurial finance.
Despite this progress over the last quarter of a century, several challenges persist in the º£½ÇÊÓƵ’s entrepreneurial ecosystem. Entrepreneurial education post-school remains inadequate, and there has been a decline in key framework conditions such as access to finance and government support. The overall entrepreneurial environment in the º£½ÇÊÓƵ has slipped from sufficient to less than sufficient, with scores for entrepreneurial finance falling over the last three years.
Addressing these issues is vital for sustaining the entrepreneurial momentum and failure to address some of those deficiencies identified at the start of the millennium indicates the need for renewed focus and action from policymakers and stakeholders. Given this, there are several areas which the new Labour Government could and should address to boost entrepreneurship across the º£½ÇÊÓƵ.
These include enhancing entrepreneurial education, ensuring sufficient access to entrepreneurial finance particularly in regions outside London, creating an immigration policy that attracts and retains diverse entrepreneurial talent, implementing measures to reduce the economic and social costs associated with entrepreneurial failure, and developing strategies to support entrepreneurial activity in every nation and region of the º£½ÇÊÓƵ.
Therefore, the GEM study shows that the entrepreneurial landscape in the º£½ÇÊÓƵ has evolved significantly over the past 25 years, shaped by global events, economic cycles, and societal changes. While progress has been made in terms of improving entrepreneurial activity and participation, there remain substantial challenges to overcome to create a vibrant and ecosystem that support entrepreneurs across the whole of the º£½ÇÊÓƵ.
