The UK’s score in the National Entrepreneurial Context Index (NECI) continues to fall, according to the newly released Global Entrepreneurship Monitor (GEM) 2023/2024 Report.
The GEM carries out survey-based research on entrepreneurship and entrepreneurship ecosystems around the world, with the UK team led by Mark Hart, professor of small business and entrepreneurship at Aston Business School. As part of the research, experts in the UK were asked to assess the country’s Entrepreneurship Framework Conditions (EFCs). These assessments are the basis for an economy’s GEM NECI score. In 2020, the overall quality of the UK entrepreneurial environment was rated as just satisfactory, with a score of 5.0. Since then, that overall quality score has declined slowly each year. The 2023 score of 4.6 places the UK 22nd of 49 economies.
According to the report, since the pandemic, the UK has been part of an increasing group of high-income economies with an assessed overall entrepreneurial environment that has slipped from sufficient to less than sufficient.
Hart said: “Small business leaders still complain that a lack of finance can hinder their growth ambitions and that they are still unsure of how to access appropriate finance. We need to work harder on improvements to the all-round financing ecosystem, integrating leadership and management support with a full range of suitable financing along the finance escalator.”
Sreevas Sahasranamam, professor at Adam Smith Business School at the University of Glasgow and one of the co-authors of the GEM Global Report 2023/24, said: “There is an urgent need for entrepreneurship education to become more mainstream in schools and higher education institutions in the UK. Globally, it is important to realise that skills imparted through entrepreneurship education such as creativity, innovation, experimentation and growth mindset, and overcoming fear of failure are going to be fundamental in a world where disruptive technologies are evolving at a breakneck pace.
“Globally, we are seeing a clear trend of entrepreneurship ecosystems in the East being rated much better compared to the West, with four of the top five countries coming from that geography. UAE and India are top two on the NECI score.”
Hart added: “While start-up rates in the UK are at an historical high the proportion of businesses that are growing is declining and the weaknesses in some aspects of the entrepreneurial ecosystem may be part of the explanation.”
Nevertheless, the proportion of adults intending to start their own business in the next three years has also been growing slowly, from 8% in 2019 to 11% in 2023. Many new entrepreneurs in the UK are outward-looking, with two in five having customers beyond the borders and three in five expecting to use more digital technologies in the next six months.
Growth expectations are strong, with one in four new entrepreneurs anticipating employing at least another six people over the next five years.