CIRCLELOOP'S

Recession-proof Index

In September 2022, the Bank of England raised interest rates to 2.25% - its highest level since 2008 - putting Britain’s economy into another recession. No one could have possibly predicted what the last few years had in store or how much businesses would need to adapt in order to survive. It’s impossible to know what's around the corner. We can’t predict economic downturns, market adjustments or even natural disasters. However, we can prepare for them. Looking to the past can provide some valuable insight that can help you make informed decisions – no matter what the future throws at you.

For those now experiencing their first recession in business or for those who had plans to launch a new startup in the next 12 months and are worried about what this means, don’t worry - we’ve done the research for you. Analysing ONS business data from the years following the 2008 recession, we’ve been able to paint a picture of what impact and outcomes can be expected based on previous startup experiences. We’ve identified which industries are the most recession-proof for new business, which regions could see businesses fare the best and how long we can expect to wait to see some recovery of startup success.

Recession-Proof Industries

01 Health

In the years following the recession, 2009-13, start-ups in the Health industry had the lowest rate of failure after 2 years at an average of 20%, making this industry the most recession-proof for new businesses.

02 Information and Communication

In the years following the recession, 2009-13, start-ups in the Information & Communication industry had the second lowest rate of failure after 2 years at an average of 21%, making this industry one of the most recession-proof for new businesses.

03 Property Industry

It was found to be the least recession-proof in the aftermath of the last recession, with close to a third (32%) of all new businesses failing after 2 years, the highest rate of business failures across all industries from 2009 to 2013. This is closely followed by Business Administration & Support Services (31%) and Finance and Insurance (31%) industries.

Recession-Proof Regions

The least recession-proof regions which saw the highest rates of business failures in 2009 were London (30%), Yorkshire & Humber (28%) and the North East (27%).

23 %

01 East & South West

In 2009, over a year after the recession began, start-ups in the East of England & South West saw the joint-lowest rate of business failures of all regions, at 23%.

24 %

02 South East

In 2009, over a year after the recession began, start-ups in the South East saw the second lowest rate of business failures of all regions, at 24%.

Recession Recovery

How the recession affected startups in Business Administration & Support Services and startups in Arts, Entertainment, Recreation & other Services.

2010

By 2010 the situation had got worse for some industries which saw further increases to the rate of business failures after 2 years.


Startups in Business Administration & Support Services start up failures increased by 8% to two in every five businesses (40%). Failure of startups in Arts, Entertainment, Recreation & other Services increased by 6% to a third of businesses (33%).

2011

By 2011 recovery is seen across almost all industries with business failure rates significantly increasing.


Startups in Business Administration & Support Services saw a 12% reduction in business failures. Startups in Arts, Entertainment, Recreation & other Services saw a 7% reduction in business failures.

Key Takeaways

  • On average, startups founded in the North fare worse as a result of a recession than businesses in the South.
  • Startups in Northern Ireland have a higher chance of failure in the immediate aftermath of a recession than those in England, Scotland or Wales.
  • It takes around 2 years post-recession for the number of startup failures to decrease across the majority of industries, instead of increasing.
  • Property is likely to be the most severely impacted industry, both in terms of initial market shock and slow recovery time.
  • The South West and East of England are the most recession-proof regions on average.
  • A business launching within the Health industry during a recession has the greatest chance of survival.

The Recession-proof Index

The following table shows the survival rates of startup businesses by industry and UK region, identifying the most recession-proof regions for each industry. This table includes data from 2009 and businesses that survived the last recession with their first two years of launching.

  • crop-info-biotech-1
    Production

    • West Midlands 77.6%
    • South West 77.4%
    • East Midlands 75.6%
    • East of England 75.1%
    • South East 74.9%
    • Wales 74.5%
    • Yorkshire & Humber 74.2%
    • North West 64.0%
    • England 73.9%
    • United Kingdom 73.8%
    • Scotland 72.5%
    • North East 71.2%
    • Northern Ireland 69.6%
    • London 65.9%

  • Construction

    • East of England 75.4%
    • South East 72.6%
    • East Midlands 72.5%
    • West Midlands 72.0%
    • South West 71.6%
    • England 70.7%
    • North West 70.4%
    • United Kingdom 70.2%
    • North East 69.0%
    • Scotland 68.8%
    • Yorkshire & The Humber 67.9%
    • Wales 67.1%
    • London 65.5%
    • Northern Ireland 63.4%

  • Motor Trades

    • South West 80.9%
    • East Midlands 80.0%
    • Northern Ireland 80.0%
    • East of England 79.8%
    • South East 77.1%
    • United Kingdom 76.6%
    • England 76.6%
    • West Midlands 76.5%
    • Wales 76.3%
    • Scotland 75.7%
    • London 74.4%
    • Yorkshire & The Humber 74.1%
    • North East 73.8%
    • North West 72.0%

  • Wholesale

    • Northern Ireland 80.0%
    • East of England 79.2%
    • South West 78.3%
    • Yorkshire & Humber 76.8%
    • North West 76.2%
    • South East 75.9%
    • West Midlands 74.9%
    • East Midlands 74.8%
    • Scotland 74.7%
    • United Kingdom 74.0%
    • England 73.9%
    • Wales 73.2%
    • North East 69.2%
    • London 67.4%

  • Retail

    • South West 78.2%
    • Scotland 78.1%
    • South East 77.9%
    • East Midlands 77.7%
    • North West 76.9%
    • East of England 76.9%
    • Wales 76.6%
    • Yorkshire & Humber 76.5%
    • United Kingdom 76.4%
    • North East 76.3%
    • England 76.3%
    • West Midlands 75.6%
    • London 73.6%
    • Northern Ireland 73.4%

  • Transport & Storage

    • Scotland 76.6%
    • East of England 75.7%
    • Northern Ireland 75.0%
    • South West 74.7%
    • North East 74.4%
    • East Midlands 73.7%
    • United Kingdom 71.6%
    • West Midlands 71.4%
    • England 71.2%
    • North West 70.7%
    • Yorkshire & Humber 69.9%
    • Wales 69.8%
    • South East 68.2%
    • London 67.2%

  • room-service-cart-food
    Accommodation & Food Services

    • South East 73.7%
    • South West 73.3%
    • East of England 73.0%
    • Scotland 72.1%
    • Wales 71.9%
    • Northern Ireland 70.7%
    • United Kingdom 70.6%
    • England 70.4%
    • East Midlands 70.1%
    • North East 69.7%
    • London 69.5%
    • North West 68.8%
    • West Midlands 67.7%
    • Yorkshire & Humber 66.8%

  • Information & Communication

    • South West 80.1%
    • South East 79.2%
    • East of England 78.6%
    • North West 78.1%
    • East Midlands 77.8%
    • England 77.5%
    • United Kingdom 77.3%
    • West Midlands 77.2%
    • North East 76.5%
    • Scotland 76.2%
    • London 75.9%
    • Yorkshire & Humber 74.1%
    • Wales 74.1%
    • Northern Ireland 73.3%

  • Finance & Insurance

    • Northern Ireland 90.0%
    • East of England 73.0%
    • South West 71.1%
    • Wales 70.6%
    • South East 70.0%
    • North West 69.2%
    • West Midlands 68.4%
    • United Kingdom 67.7%
    • England 67.4%
    • London 66.5%
    • Scotland 65.2%
    • Yorkshire & Humber 62.2%
    • East Midlands 58.8%
    • North East 53.8%

  • Property

    • Northern Ireland 76.9%
    • East of England 75.5%
    • Wales 74.4%
    • Yorkshire & Humber 74.3%
    • South West 72.9%
    • West Midlands 71.9%
    • North East 71.9%
    • East Midlands 69.6%
    • United Kingdom 69.1%
    • England 68.9%
    • Scotland 67.0%
    • South East 66.7%
    • London 65.7%
    • North West 64.6%

  • Professional Scientific & Technical

    • South West 81.6%
    • East of England 80.0%
    • Yorkshire & Humber 79.9%
    • South East 79.8%
    • North West 79.8%
    • North East 79.7%
    • Scotland 79.7%
    • East Midlands 79.0%
    • Wales 78.6%
    • England 78.2%
    • United Kingdom 78.2%
    • West Midlands 77.0%
    • London 74.6%
    • Northern Ireland 61.9%

  • Business Administration & Support Services

    • South West 74.3%
    • Yorkshire & Humber 73.2%
    • Wales 72.8%
    • North West 72.4%
    • East Midlands 71.9%
    • East of England 71.2%
    • South East 71.0%
    • Scotland 69.3%
    • England 68.8%
    • North East 68.8%
    • United Kingdom 68.5%
    • West Midlands 66.9%
    • London 61.8%
    • Northern Ireland 40.0%

  • Education

    • Yorkshire & Humber 83.3%
    • East Midlands 81.3%
    • North East 81.0%
    • East of England 80.6%
    • Scotland 80.6%
    • Wales 80.0%
    • South East 79.5%
    • North West 79.2%
    • United Kingdom 78.9%
    • England 78.8%
    • West Midlands 78.0%
    • Northern Ireland 77.8%
    • London 76.0%
    • South West 75.0%

  • Health

    • North East 84.8%
    • East of England 83.2%
    • Wales 82.4%
    • Scotland 82.4%
    • West Midlands 82.0%
    • South West 81.6%
    • North West 79.7%
    • South East 79.6%
    • London 78.8%
    • East Midlands 78.8%
    • Northern Ireland 78.3%
    • United Kingdom 77.1%
    • England 76.6%
    • Yorkshire & Humber 50.3%

  • museum-painting
    Arts Entertainment Recreation & Other Services

    • East Midlands 76.6%
    • East of England 76.4%
    • South East 75.9%
    • South West 75.3%
    • Wales 75.0%
    • North West 74.2%
    • Scotland 74.2%
    • Northern Ireland 73.8%
    • United Kingdom 73.8%
    • England 73.7%
    • North East 72.9%
    • West Midlands 72.9%
    • Yorkshire & Humber 70.9%
    • London 70.7%

  • Total

    • South West 76.7%
    • East of England 76.6%
    • South East 75.7%
    • East Midlands 75.1%
    • Scotland 74.3%
    • North West 74.3%
    • Wales 73.9%
    • England 73.9%
    • United Kingdom 73.8%
    • West Midlands 73.6%
    • North East 73.4%
    • Yorkshire & Humber 72.2%
    • London 70.5%
    • Northern Ireland 67.0%
Quote Mark Quote Mark

“We founded Radfield Home Care in early 2008 and grew quickly while the great recession played out. The need for care services grows whether there is recession or not, but it can become easier to recruit staff during a recession. With recruitment being a major limiting factor for many businesses right now, recession may help a little with sourcing labour. We prepared very early for the pandemic and so while many were struggling to find PPE, we were able to keep our staff and clients safe. Early planning for supply chain disruption can really help avoid sticky problems down the line. Recession may bring similar challenges, so early planning for energy and supply chain disruption may be the difference between staying in business and having to call it quits.”

“Our key concerns for the next 12 months are focused on how we can help all of our people manage the impact of the cost of living. Also how we can ensure that our clients, who are extremely vulnerable, can remain warm and secure in their homes this winter. The work that Circleloop is doing to update people about the possible impacts of an upcoming recession is extremely valuable. It can help us to learn from previous experience and with good planning, hopefully make the best of a difficult period."

Alex Green, Director at Radfield Home Care

Methodology

In September 2022, CircleLoop undertook an analysis of data sourced from the Office of National statistics. The data included business births and deaths from 2008 to 2013, broken down by industry and UK regions. To ensure the data analysed referenced startups and SMEs specifically, all business ‘deaths’ were recorded only for businesses that failed within 2 years of their launch. By comparing the data across the years surrounding the 2008 recession, CircleLoop uncovered the trends and insights detailed above.

At CircleLoop we’re here to help you stay connected. Our cloud-based phone system offers seamless integrations with a number of other apps and platforms too and provides virtual numbers when you’re looking to call from a particular location while you’re on the go.