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