I’ve spent time recently going through the latest Global Entrepreneurship Monitor (GEM) report, one of the most widely used international studies of entrepreneurial activity (https://www.gemconsortium.org/reports/latest-global-report).

The headline most people will take from the GEM is this: More people are starting businesses. Sounds positive however it is not the headline that matters for the UK which is: Fewer start-up businesses are surviving.

We don’t have a start-up problem. We have a business survival problem. The report is clear that in the UK the transition from start-up to stable business is weak.

The report also signposts why this is happening. The ‘system’ does not understand how businesses actually grow. Legislators are designing policy as if businesses behave in a straight line which they don’t. For example:

• Income is usually uneven 
• Growth is often slow before it is stable 
• Risk nearly always increases before it reduces 

Yet pressure is applied as if stability already exists at an early stage. This is not encouraging enterprise, it is distorting it. Cashflow is not being squeezed. It is being dismantled. Businesses are not failing because they are weak. They are failing because their cashflow is being hit from multiple directions at once:

• Tax being brought forward 
• Wage increases 
• Employer cost increases 
• Thresholds not moving with those costs 
• More legislation landing at the same time 

Individually, these can be dealt with, together they break businesses.

In the UK, policy is being designed for bad actors with an increasing proportion of the system designed to prevent misuse. The upshot is that good businesses carry the cost of fixing bad ones. The wrong outcomes are being measured and treated which is undermining the possibility of a successful entrepreneurial environment.

I’ll give a simple but significant example. A business that employs five people for twenty years, that’s 100 years of employment in total, pays its way, and serves its customers well is not a failure. It is a success. But it disappears inside the label “SME” alongside businesses operating at a completely different scale. 

There is also an underlying cultural issue, the fact that the UK still does not deal well with failure. From an early age, we are taught to avoid getting things wrong rather than to learn from it. This carries through into business or even the attempt to start a business. The report talks about treating ‘exit’ as learning however there is still stigma attached to closing a business.  Similarly, those who achieve greatly are often despised and analysed for faults rather than being celebrated for their achievement, support of other businesses or philanthropy. Either way these are symptoms of a self-limiting culture, one that rejects business success. If we want more people to build businesses and keep going when things are difficult, that has to change. People need to experience risk earlier, understand it, and recover from it. Otherwise we create a system where people are encouraged to start, but not equipped to continue.

The report makes it clear that only a minority of countries have the conditions in place to properly support entrepreneurship. The UK is not leading that group. In some areas, the UK is going backwards, it is in entrepreneurial decline. At the same time other economies are improving access to finance, simplifying regulation and strengthening their support for business survival, the UK is adding cost, complexity and friction. A further set of reasons for the very best entrepreneurs to emigrate.

There is also a question of accountability. Governments introduce policies but who is measuring whether they are actually working? For example, the ‘Backing your business’ policy July 2025, is it grounded in the established knowledge of the GEM? Are its contents being measured against the GEM indicators? Are survival rates being tracked against those interventions? Are conditions improving or becoming more restrictive? If policy is not being measured against real outcomes, then it is very likely to be performative rather than effective.

Additionally, there is also a bigger structural issue in how investment works. At the moment, businesses are expected to pitch to investors. Why? If entrepreneurship is as important as we say it is, the flow should not be one way. Investors, including banks and institutions, should be competing to attract the right businesses, pitching themselves as potential investors to businesses. This would be an excellent opportunity to be clear about who they support, what they offer beyond money, and what success looks like in their portfolio. At the moment, too much of that is mysterious creating an imbalance and limiting access. It is an exclusive club. If the UK is serious about improving survival, this relationship needs to be rebalanced.

Now layer the imminent impact of AI on top of all of this. AI is already reshaping employment. Fewer people are needed to deliver the same output, a fact that is accelerating at pace. So we need to ask a simple question: Where do those people go? Think about it. It’s not difficult to guess that the pension pots are not prepared for such a mass of early retirement from the public or private sector. And what about the already stretched welfare system, doubt that is prepared to support all of these people either.

The answer will be for these people to create their own income with entrepreneurship no longer a choice rather a mechanism for economic survival not just for the individuals but also for UKPLC. This is no longer about encouraging start-ups. This is about enabling people to sustain themselves. And right now, the UK is not set up for that.

Financial pressure is being applied before stability exists. Static or reducing thresholds increase the tax burden and very different businesses are being treated as if they are the same.

Systems are being created that add friction at the point businesses are trying to grow.

The good news is this is fixable:

• By aligning obligations with actual cashflow
• By allowing time for businesses to stabilise
• By ensuring businesses get paid on time
• By not grouping completely different businesses together

**Politicians and campaigners can claim a climate emergency, a doctors pay emergency or even a welfare fund emergency but without tax receipts to fund these ambitions, their efforts are quite frankly pointless. This is an entrepreneurial emergency. The question is, who is going to respond?**

Sam Acton is the founder of the Domestic Angels network of small businesses. She is a Member of the BCP Council Audit & Governance Committee and a Trustee of the Healthbus Charity. Sam has over 20 years’ experience building and supporting SMEs and regularly contributes to discussions on employment, governance and sustainable business growth in Westminster. https://www.linkedin.com/in/sam-acton/