The current COVID-19 pandemic often leads to predictions of substantial financial hardship for businesses. Some countries expect a significant GDP decrease followed by a recession. The broader impact of the coronavirus on individual economies will be affected by governments’ policies and companies’ ability to adapt. It seems that the UK government has managed quite well and a lot of entrepreneurs actually established new businesses in recent weeks. Our analysis is based on data available in the HitHorizons database, which uses data from the UK Companies House.
Key fact and figures:
- As a result of measures undertaken by the UK government, a record low number of companies have shut down since April 2020 - just 1,341 businesses in June 2020
- In June 2020 a record number of companies were established – 77,586 This represents a 47% YOY increase
- The highest increase in the number of new companies established was in the London region - a 67% YOY increase
- The highest number of newly established companies operate in Retail sale via mail order houses or via internet - 6.4% total
- 45% of newly established companies operating in online sales were launched in Greater London
Incorporation and dissolution trend
The graph below shows that in the past 5 years June 2020 had the highest number of newly established companies with a total of 77,586 business launched. This represents a 47% YOY increase compared to June 2019. On the other hand, the number of companies closed is at record low levels since April 2020. Data available in our database shows that only 1,341 businesses were closed in June 2020. This decrease is related to measures undertaken by the UK government in response to the pandemic. Under this measures, Companies House has temporarily paused the strike off process in order to prevent companies being dissolved. Companies will have more time to update their records to avoid dissolution.
The highest increase in the number of newly established companies was in London, where 27,861 companies were launched in June 2020 - this represents a 67% YOY increase. The lowest increase was in Wales with just a 10% increase YOY.
Incorporation and dissolution of companies by month in United Kingdom
What do those newly established companies do?
Most of the companies established in June 2020 operate in Retail sale via mail order houses or via internet - total of 6.4%. Among the total number of UK companies just 1.8% focus on this activity. The prevalence of this SIC code (Standard Industrial Classification) among the newly established companies is an indication of the market adapting to the increased popularity of online shopping among consumers.
Our data also shows an increase in Real Estate - more specifically in Other letting and operating of own or leased real estate (5.2% or newly established companies) and Buying and selling own real estate (4.1% of newly established companies). Overall, in the whole UK, these SIC codes are assigned to a lower percentage of companies compared to companies established in June 2020 - 3.6% with Other letting and operating of own real estate and 2.3% with Buying and selling of own real estate. This increase in the number of newly established companies in Real Estate indicates increased activity in this industry during the pandemic
Top 20 SIC codes of companies incorporated in June 2020 in United Kingdom
|SIC Code||Industry||Number of Companies||Percentage|
|Retail sale via mail order houses or via Internet (47910) 4,914 6.4%||Wholesale, retail||4,914||6.4%|
|Other letting and operating of own or leased real estate (68209) 3,963 5.2%||Real Estate||3,963||5.2%|
|Management consultancy activities other than financial management (70229) 3,167 4.1%||Science||3,167||4.1%|
|Buying and selling of own real estate (68100) 3,129 4.1%||Real Estate||3,129||4.1%|
|Other service activities n.e.c. (96090) 3,051 4.0%||Service||3,051||4.0%|
|Other business support service activities n.e.c. (82990) 2,456 3.2%||Administrative||2,456||3.2%|
|Freight transport by road (49410) 2,036 2.7%||Transportation||2,036||2.7%|
|Construction of domestic buildings (41202) 1,995 2.6%||Construction||1,995||2.6%|
|Take-away food shops and mobile food stands (56103) 1,958 2.6%||Accommodation||1,958||2.6%|
|Information technology consultancy activities (62020) 1,722 2.2%||ICT||1,722||2.2%|
|Dormant Company (99999) 1,541 2.0%||Dormant||1,541||2.0%|
|Development of building projects (41100) 1,515 2.0%||Construction||1,515||2.0%|
|Other retail sale not in stores, stalls or markets (47990) 1,494 2.0%||Wholesale, retail||1,494||2.0%|
|Hairdressing and other beauty treatment (96020) 1,448 1.9%||Service||1,448||1.9%|
|Other human health activities (86900) 1,260 1.6%||Health||1,260||1.6%|
|Management of real estate on a fee or contract basis (68320) 1,242 1.6%||Real Estate||1,242||1.6%|
|Non-specialised wholesale trade (46900) 1,102 1.4%||Wholesale, retail||1,102||1.4%|
|Residents property management (98000) 1,055 1.4%||Home||1,055||1.4%|
|Other retail sale in non-specialised stores (47190) 1,035 1.4%||Wholesale, retail||1,035||1.4%|
|Retail sale of clothing in specialised stores (47710) 1,023 1.3%||Wholesale, retail||1,023||1.3%|
|Other 50,685 66.2%||50,685||66.2%|
Where were most of the newly established companies with popular SIC codes launched?
Most of the companies established in June 2020 and operating in Retail sale via mail order houses or via internet are based in the county or Greater London - 2,191 companies. This represents 44.7% of all companies included in this analysis. Greater London is followed by Greater Manchester (5.5%) and West Midlands (4%).
Top 15 United Kingdom counties with the highest number of companies operating in "Retail sale via mail order houses or via Internet" in June 2020
|County||Number of Companies||Percentage|
|Greater London 2,191 44.7%||2,191||44.7%|
|Greater Manchester 267 5.5%||267||5.5%|
|West Midlands 195 4.0%||195||4.0%|
|West Yorkshire 144 2.9%||144||2.9%|
|Merseyside 106 2.2%||106||2.2%|
|Essex 99 2.0%||99||2.0%|
|Kent 96 2.0%||96||2.0%|
|Hertfordshire 90 1.8%||90||1.8%|
|Berkshire 81 1.7%||81||1.7%|
|Cheshire 79 1.6%||79||1.6%|
|Lancashire 67 1.4%||67||1.4%|
|Surrey 62 1.3%||62||1.3%|
|Leicestershire 60 1.2%||60||1.2%|
|Dorset 59 1.2%||59||1.2%|
|Nottinghamshire 58 1.2%||58||1.2%|
|Other 1,244 25.4%||1,244||25.4%|