Report January 2021

In a nutshell

Highlights

  1. Daily business creation increases by 18.5 % between the first and second lockdown.
  2. 16.9% more company registrations in the second lockdown, relative to the first one.
  3. 17,167 additional companies registered in December 2020 than in December 2019.
  4. 2,465 new daily company registrations since the first Pfizer/BioNTech vaccine.
  5. Manufacturing, retail and wholesale sectors outperform in December 2020 relative to their 2019 levels. Accommodation and Food services sector’s recovery, occurred after the initial lockdown, worsens as certain areas enter the new Tier-4 scheme.

We analyse Companies House “basic company data” up to the December 31st, 2020 to understand the effect of COVID-19 policies on business creation, and hence, economic activity. We find that daily business creation increases by 18.5% after the first, but before the second, lockdown. 17,167 additional companies registered in December 2020 relative to December 2019. There is more firm creation in every sector, notably in manufacturing, retail, and wholesale sectors. Firm creation continues to increase relative to recent months, but accommodation and food services’ strong performance weakens.

Aggregate Analysis

Daily

The charts below show the daily company incorporations in the UK for 2020.

Jan 2020Apr 2020Jul 2020Oct 2020Jan 202101000200030004000
Median (pre-lockdown I)Median (total)Median (post-lockdown I)Median (during lockdown I)Median (during lockdown II)Median (post-lockdown II)Median (during Tier-4 scheme)Daily Company Incorporations01-01-2020 to 31-12-2020Number of IncorporationsSource: Authors' calculationsSource: Authors' calculations

The following table summarises the median and the mean of daily new registrations in different periods in 2020. We notice a moderate shock during lockdown-II. The daily median goes from 3057 incorporations during lockdown-II to 2675 incorporations per day after lockdown-II, but before the New Tier-4 Scheme. This is a fall in business creation of 1.9%. London, South East and East of England move to tier 4 on December 20th, under the new Tier scheme. From the 20th December to 31st December, firm creation is significantly higher than over the same 12 days in 2019 (regardless of the EU-UK Trade deal). Daily median business creation shrinks by 7.5% and 20.8% relative to the period during the first and second lockdown, respectively. Most of the business creation occurs on December 30th and 31st and concerns the manufacturing sector. This may be related to Brexit and more specifically to the EU-UK Trade and Cooperation Agreement (TCA).

Table: Median and Mean of new daily companies Incorporations in 2020

Lockdown ILockdown IINew Tier-4 Scheme
TotalBeforeDuringAfterDuringAfterDuringsince first vaccine
Median2848.52581261630583057267524202563
Mean2662.0762397.6622582.5452849.62942.9052572.425292465.353

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Relative

Since July, company registrations persistently exceed their 2019 levels. Over 2020, on average, 2848 daily new companies register.

Similar performance is observed between the end of the first and during the second lockdown (July - December). This may be, mostly, attributed to the less restrictions attached to lockdown-II given the different duration of these two periods. 16.9% more companies registrations noted during the second lockdown than the first one.

Lockdown ILockdown IITier-4 scheme0510152025303540455012345
Company registrations Rate​(Same week of reference in 2019)​Weeks during 01-01-2020 to 31-12-2020Ratio = Registrations 2020 / Registrations 2019Source: Authors' calculationsSource: Authors' calculations

Regional Analysis

Postcode Area

The following map shows the average percentage change of new registrations occurred in December relative to December 2019. Greater changes are showed with bigger bubbles. To see the values, hoover your mouse over each bubble.

Average change of New Incorporations​(Change measured between December 2020 and its equivalent period on 2019)​Source: Authors' calculationsSource: Authors' calculations

Country

The following graph aggregates the business creation by country. We separate London from England. In December 2020, firm creation remains higher in all regions than it was in 2019. Northern Ireland’s recovery commences the end of June. It faces, though, several fluctuations until the end of lockdown-II.

Lockdown ILockdown IITier-4 scheme05101520253035404550-9010110210310410510610710810
EnglandNorthern IrelandScotlandWalesLondonAverage change of New Incorporations​(Change measured between December 2020 and its equivalent period on 2019)​Weeks between 01-01-2020 - 31-12-2020% change of new firm registrationsSource: Authors' calculationsSource: Authors' calculations

Sectoral Analysis

SIC Sections

The following graph illustrates the company registrations in 2020 by industrial sector relative to 2019 values. For the analysis, we use the 2-digit SIC level and convert it to sectors, following the ONS classification.

Lockdown ILockdown IITier-4 scheme05101520253035404550-100400900140019002400290034003900
Accommodation and food service activitiesActivities of extraterritorial organisations and bodiesActivities of households as employers; undifferentiated goods-and services-producing activities of households for own useAdministrative and support service activitiesAgriculture, forestry and fishingArts, entertainment and recreationConstructionEducationElectricity, gas, steam and air conditioning supplyFinancial and insurance activitiesHuman health and social work activitiesInformation and communicationManufacturingMining and quarryingOther service activitiesProfessional, scientific and technical activitiesPublic administration and defence; compulsory social securityReal estate activitiesTransportation and storageWater supply; sewerage, waste management and remediation activitiesWholesale and retail trade; repair of motor vehicles and motorcyclesChange in new firm registrations, by sector​(relative to the 2019 values, in the same week)​Weeks between 01-01-2020 - 31-12-2020% change of new firm registrationsSource: Authors' calculationsSource: Authors' calculations

In December 2020, all sectors observe higher firm creation than December 2019. Mining and quarrying, arts, entertainment and recreation sectors present the smallest change relative to their 2019 levels. Manufacturing, wholesale, and retail trade sectors present the greatest increase in firm creation. Accommodation and food services observe a significant drop after the introduction of Tier-4 scheme.

Last updated on Aug 6, 2021