UK sliding in quality of entrepreneurship ecosystem, research finds
The UK is ranked at number 25 of 51 countries on the quality of entrepreneurship ecosystem economies, a drop from rank 18 last year, according to the new Global Entrepreneurship Monitor (GEM) National Entrepreneurship Context Index (NECI) released today.
According to the ‘GEM 2022/2023 Global Report – Adapting to a New Normal’ – the UK’s index score decreased from 4.9 (in 2021) to 4.7. UK’s NECI score is below that of other comparable economies such as the USA (5.2), France (5.1), and Germany (5.1).
Professor Mark Hart, lead of the GEM UK team and Professor of Small Business & Entrepreneurship at Aston Business School in Birmingham, said: “It is not surprising that framework scores worsened over the year given chaotic trading conditions and supply chain blockages, as the implications of Brexit continued to be multiplied by the aftermath of the pandemic and compounded by rising energy prices.”
GEM defines the entrepreneurial context of a particular economy in terms of 13 different characteristics, labeled the Entrepreneurship Framework Conditions (EFCs). The NECI results are based on the scores of the Framework Conditions for each of the participating 51 economies. At least 36 experts are selected to assess statements that make up the scores that can be compared across economies.
In the period 2021 to 2022, nine EFC scores worsened, led by Physical Infrastructure and Ease of Entry: Burdens and Regulation, both directly related to the post-Brexit, post-pandemic turmoil. An economy once lauded for its world-leading financial markets was assessed as insufficient in both the level of (4.87), and access to (4.05), entrepreneurial finance, alongside insufficient entrepreneurial education at all levels, and diminishing government policy support. Despite having top universities, UK was rated as not sufficient (<5.0) in Research and Development Transfers.
On the bright side, experts see an improvement in Government entrepreneurship programmes, which is probably partially driven by the deployment of Help to Grow programmes.
However, there is still much to be done as the score of 4.66 is still below sufficiency level. Similarly, on the degree of recovery towards pre-pandemic levels of activity in companies, the UK’s score suggests sufficiency (5.57). It is still considerably lower than in benchmark countries (6.36 in the USA, 6.34 in France, and 5.79 in Germany).
The UK compares relatively well in terms of attainment of Sustainable Development Goals. Experts perceive for example the degree of priority assigned to good practices of social responsibility by UK entrepreneurs as 5.83 out of 10 which is higher than in the US (5.64) and in Germany (5.61), although lower than in France (6.34).
Dr Sreevas Sahasranamam, a co-author of the GEM global report and associate professor in Entrepreneurship & Innovation at Strathclyde Business School in Glasgow, said: “Globally, we observe that the quality of entrepreneurship ecosystems are now better in the East, with UAE, Saudi Arabia, Taiwan, and India taking the top four spots. These are clear trends that could accelerate the Eastward movement of the centre of gravity of global economic activity.”