3 November 2015

Optimism, prosperity and getting ahead


It is hard to imagine that as violence from insurgents began to escalate in Iraq in 2012, the country still had greater entrepreneurial optimism than the UK. As Iraqis remained hopeful that their country could still be a good place for people with ideas and aspirations, Brits remained pessimistic. 62% of Iraqis felt the country a good place for those starting new businesses. Entrepreneurial dreams shone bright. In Britain, the light was faint.

Despite 2012 seeing the birth of over a quarter of a million new businesses in the UK – the highest since 2007 – just 48% of Britons felt that the country was a good place for those starting businesses. This put the UK in the bottom tranche of developed countries, with an entrepreneurial pessimism that matched Afghanistan’s, trailing not only Germany, France, and Spain, but Iraq too.

Fast forward two to three years, and the transformation is clear. The Legatum Prosperity Index™ shows that the UK has gone from a nation of entrepreneurial pessimists to the entrepreneurship capital of Europe. The UK ranks 6th globally for Entrepreneurship & Opportunity and 70% of Britons now think the country a good place to start a business. This is the highest in the EU and higher than almost every developed nation in the world. Iraq, still optimistic at 65%, now sits behind Britain.

Britain’s business environment has certainly improved since 2012. It is not just corporation tax rates that have been falling, but the costs of starting a business too. The Index shows that business start-up costs in the UK have more than halved since 2012, from 0.7% GNI per capita to 0.3%. In 2014 that was just £81.45, the third lowest in the world.

It is unsurprising therefore that business ownership in the UK is rising. 10% of Brits had their own business in 2012, but today that is 15%, taking Britain from 9th to 2nd in the EU. This business creation is not just confined to the South East either. Whilst London retains the highest business birth rate in the UK (18%), the next regions chasing on its heels are both the North East and North West (15%). New businesses are taking root across the country.

They are also taking root in the most unlikely of places. Entrepreneurship is not simply reaching for the simple ideas in the most affluent parts of the country. A recent report from the Centre for Entrepreneurs charts the remarkable transformation of Britain’s dilapidated and disadvantaged seaside towns at the hands of some of the country’s most interesting entrepreneurs.  From the old swimming baths in Hastings being converted into the largest subterranean skate park in the world, to the architectural revolution in Littlehampton, the imagination and initiative of British entrepreneurs are effecting both economic and social change.

Perhaps then it is this entrepreneurial revolution in some of the most forgotten corners of the UK that is driving Britons’ improving perceptions of opportunity. Since 2010, those linking working hard to getting ahead in life has risen from 78% to 88%. From the Scarborough man whose small business won one of the biggest marine salvage contracts ever, to the family businesses turning Portrush into a culinary destination, the link between hard work and getting on is well known to the nation’s entrepreneurs. As business ownership spreads to reach all corners of the UK, so too does this sense of opportunity and aspiration.

From tax rates to start-up costs, aspiration to optimism, in the last few years Britain has established herself as the entrepreneurship capital of Europe. In the ‘nation of shopkeepers’, more own more businesses than ever before. In 2012, nothing separated entrepreneurial optimism on the streets of Kabul from the streets of London. Baghdad was more optimistic than Birmingham. Today all that has changed. The culture of aspiration and entrepreneurial optimism seen in the most unlikely and troubled nations has taken root in Britain too.

As Britain now knocks on the door of the global top five for Entrepreneurship & Opportunity in the Prosperity Index, the force of success cannot be underestimated. Whilst policy change matters, ultimately it is the hard graft of Britain’s entrepreneurs and job creators that has lifted the nation’s entrepreneurial hopes. From hard work comes opportunity; as long at Britain does not forget that, the top five may not be far off.

Harriet Maltby is the Government & Economic Policy Researcher at the Legatum Institute.