Posted: Thu 6th Apr 2023
Almost 800,000 companies were formed last year, a 4.53% increase on 2021, new analysis reveals.
A total of 790,390 new firms were registered at Companies House, the Centre of Entrepreneurs (CFE) said, which is the highest level since the organisation's first report on company formations in 2014.
The study found there were 62,403 registrations in January 2022, a start of the year record.
The peak of the year came in March with 76,104 new firms. The figure was a record for that month but below the all-time high of 80,469 in July 2020 when the UK emerged from the first coronavirus pandemic lockdown.
Company formations increased in Wales, Scotland and England in 2022 compared to 2021, but Northern Ireland saw a fall.
The post-COVID reset
The report described company formations in 2022 as the conclusion of the "post-COVID reset".
New business registrations slowed during the first lockdown in 2020, but surged to record formations during the reminder of the year.
The post-COVID reset started in 2021 and in 2022 registrations returned to the numbers CFE said it would expect.
Businesses related to the pandemic, such as manufacturers of medical equipment, pharmaceutical goods and PPE, saw significant growth in 2020. Most of these reverted to pre-COVID registrations in 2020, with the exception of cleaning services which the report said reflected the fact that enhanced cleaning of buildings remained widespread.
The at-home economy
Dirven by the lockdowns and people being at home, consumer businesses boomed in 2020 with new online retail start-ups more than doubling to 43,127.
Post-COVID, the majority of these businesses have remained strong or grown further which CFE said reflects a continued focus on leisure and lifestyle due to increased home working.
Earlier this year, Enterprise Nation also analysed company formations in 2022.
Enterprise Nation founder Emma Jones said:
"Amidst the doom and gloom and straitened times we find ourselves in, the British enthusiasm for entrepreneurship continues to grow.
"We know that these figures are not a perfect reflection of the UK's start-up community, but they do tally with our own research and new membership data so far this year.
"For example, we've already seen a dramatic increase in new members – up 78% on this time last year.
"Despite being constantly bombarded with an unrelentingly bleak economic outlook and the news that many businesses are struggling with energy bills, skills and labour shortages and an increasing tax burden – people still have not been deterred from starting a business. In fact, the opposite is true."