08/12/2008 - Fewer firms set up as crunch bites
Company start-ups have fallen to their lowest level since the dot-com crash of 2001, reflecting the gathering pace of the UK's economic downturn.
Companies House data obtained by the Financial Times show that only 23,871 limited companies were set up in November - 34% below the same month two years ago. The decline in start-ups comes as existing small businesses feel the pressure of tighter lending conditions. A new study by the Federation of Small Businesses reveals that one in three small businesses is still struggling to get affordable credit from banks despite commitments to lend fairly.
Meanwhile, some banks are acting to help smaller firms, with HSBC saying that it is to make available £1 billion of extra funding to support small businesses through the recession. Royal Bank of Scotland has also agreed to freeze overdraft rates for its business customers for at least a year.
The Insolvency Service says that the number of firms wound up between July and September was more than 26% higher than last year - the biggest jump since the beginning of the last recession in the final quarter of 1990. And the UK's slide into recession will be officially confirmed early next year when figures show a second successive quarter of economic contraction - the generally accepted definition of recession.
Copyright © Press Association 2008
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