UK remains popular destination for EU company founders
Brexit may have severed the UK’s political ties to the continent, but it doesn’t seem to have diminished the UK’s appeal as a place to live and work.
Instead of seeing a contraction in the numbers of EU natives starting businesses in the UK, there has been an increase each year since we voted to leave the EU.
As of the end of 2020, the UK is home to more than 1.5 million business founders born outside the UK. In total numbers, more than a fifth of the founders of UK-registered businesses are immigrants.
What can we learn from the numbers of EU residents coming to the UK to start their next venture?
We’ve investigated the business formation data, which was compiled by DueDil. Let’s look at the data…
This data analyses the SIC (standard industrial classification) codes that businesses use to categorise their business activities. NB. one company can have multiple codes, if their activities cover multiple service or product sectors.
Note: the data doesn’t show when the founders have arrived. In all likelihood many have been in the UK for a number of years prior to setting up a company.
Popular industries for EU founders
People moving the UK to start a business are forming companies in a wide range of industries. The most popular industries for EU founders include office administration (93,285 founders), land transport (52,685 founders), retail (50,585 founders), computer programming (47,261 founders), and construction (44,156 founders). The most popular industries are likely to relate to areas where the UK has a skills shortage.
In raw numbers, the top ten nationalities of non-UK founders (as of April 2021) are Irish, Romanian, Polish, German, French, Italian, Bulgarian, Dutch, Spanish, and Swedish. This broadly matches population sizes, except that Spanish representation is relatively low and Romanian particularly high.
The sharp rise in Romanian business founders in the last few years is significant. With average Romanian wages approximately a third of UK salaries, it’s clear that many Romanians stand a good chance of increasing their income by moving to the UK. While some people visit the UK on a temporary basis to work, plenty of Romanians also move with their families and put down roots.
Most Romanian founders are in the 30-40 age bracket. And a significant majority are male – with women only representing 17.6% of all Romanian founders. This is unsurprising given the prevalence of construction in the statistics – an industry that remains predominantly male.
Construction and transport dominate the activities for Romanian founders. This echoes an article from UK Construction Online which suggests that “the UK’s existing skills shortage is no secret… with EU talent currently making up eight percent of the construction industry workforce”.
After years of increasing migration from Poland, a growing Polish economy, as well as initiatives like the “Wracaj do Polski” (‘Come Back to Poland’) campaign, saw a reduction in the pace of Polish immigration to the UK. Although as our data reflect, the UK is still a popular destination for Polish entrepreneurs.
The majority of Polish founders are in the 30-40 age bracket, closely followed by the 40-50 age bracket. This suggests that Polish founders are starting businesses after a prior career or business venture in Poland.
The gender divide is significant, though smaller than that of Romanian founders. 71.5% of Polish founders are male, compared to 23.1% female (5.4% are not recorded). Could it be that the well-established Polish communities in the UK create a more welcoming environment for female entrepreneurs?
The industry make-up is slightly more skewed towards retail trade than their Romanian counterparts, but otherwise the dominant industries are transport and construction. One noteworthy difference is that 4,914 Polish founders are working in computer programming and consultancy.
It may be surprising that so many people are leaving Germany to start companies in the UK, but our company founder data mirrors research from Germany’s Federal Statistics Office, which reported that the UK is the second most popular destination for German migrants. According to their official statistics, 156,000 Germans resided in the UK in 2018, with more than 8,000 moving in the year to 2018 alone.
The characteristics of German migrants are dramatically different from the Romanian and Polish founders. For starters, they tend to be much older. The majority (30%) of German founders are in the 50-60 age bracket, followed by 40-50 (22%). Just 15% of German founders are under 40 years old. This may suggest that German migrants are more likely to move to the UK after developing their careers at home, or they may be responding to specific skills shortages in the UK.
The gender split is once again massively biased towards men, with women only representing 20.4% of German company founders in the UK.
The activities of German founders are significantly different to what we see from Romanian and Polish founders. Construction and transport do not break into the top 10, which is instead populated with clerical, professional, and scientific activities.
The forces driving migration and job hunting are clearly complex, influenced by diverse factors such as skills shortages, wage disparity, and economic opportunity. For every immigrant sending money to families back home, there are many migrants who settle in the UK, not simply for their job, but for a new way of life. It’s important to remember that there are millions of different migrant stories, and it’s difficult to characterise the actions and motivations of such a diverse group.
The encouraging news is that the UK is still seen as an attractive place to live and work, and is still welcoming to entrepreneurs from across Europe, even after Brexit.
Justin Fitzpatrick, CEO at DueDil, commented:
“Brexit has been an all-encompassing and powerfully divisive issue ever since the announcement of the referendum. The business community has grappled with mixed forecasts about Brexit’s impact from think tanks on both sides. Using insight from the DueDil Business Information Graph (B.I.G.)TM we analyzed the contribution of EU nationals to entrepreneurship in the UK from the referendum’s announcement to the present.
“The data is clear… We see strong and consistent increases in the numbers of EU nationals resident in the UK who are starting businesses here. We are immensely proud to be partnering with Tide to make it easier for these founders and entrepreneurs to open a business bank account as seamlessly as possible and keep the SME economy thriving”.
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Photo by RODNAE Productions, published on Pexels