France leads business birth rates as BRICS growth slows

FRANCE increased its business birth rate to double-digits in 2012, as G7 countries improved proved their company growth while BRICS saw a reduction slowing of business creation.

A study by RSM International found 1.9% growth in active enterprises for the G7, equating to 531,000 new companies across Canada, France, Germany, Italy, Japan, UK and the US for 2011-2012. This compared to a combined annual growth rate of 0.8% between 2007 and 2011.

Brazil, Russia, India, China and South Africa dominated business growth with an average of 5.8% rise each year from 2007-2011. In 2012, this slowed to 4.9%, or 1.2m new enterprises.

France, which achieved a 4.5% average business birth rate from 2007 to 2011, saw its enterprise creation net growth jump to 16.7% in 2012, well ahead of its nearest G7 peer, the UK, at 1.2% growth for the year.

Canada saw the worst performance of the G7 and the 38 countries analysed by RSM, with a reduction of 13.6% in businesses in 2012.

Of the BRICS nations, China led the way with 9.1% company growth in 2012, followed by Brazil at 3.4%, while Russia, India and South Africa saw the number of companies decline by 0.4%, 3.2% and 10% respectively.

RSM International chief executive officer Jean Stephens said although there has been a convergence of business growth rates between the G7 and BRICS, there is “huge variation” within the groups.

Wholesale and retail trade and professional services were the biggest growth areas, as these sectors have “relatively low barriers to entry”. However, Stephens noted a third of countries analysed showed falls in the number of active enterprises.

She said: “Creative destruction and the reallocation of capital to more efficient existing and new businesses will have a large part to play in this process but the global economy remains fragile. The watch phrase for the next year must be no more than cautious optimism as individuals and companies respond carefully to government actions and macro indicators.”

Yesterday a Bank of England report found low interest rates had a positive impact on business survival through the financial crisis, but companies that were just able to stay afloat were now contributing to drag on the UK’s productivity growth.