UK Sees Alarming Drop in Women-Led Firms, Costing Economy £250B
Britain is witnessing a concerning decline in women-led firms, bucking the trend seen in other advanced economies. This downturn, driven by various challenges, is costing the UK economy dearly.
The proportion of female-led SMEs in Britain has fallen from 19% in 2021 to 14% in recent surveys. This decline equates to tens of thousands fewer women at the helm of companies. The UK is losing out on potential economic gains of up to £250 billion if women started and grew businesses at the same rate as men.
Women entrepreneurs face significant barriers. They receive a fraction of venture capital funding, with less than 2% going to all-female founding teams. This forces many to rely on personal savings or debt. Rising National Living Wage is also hitting sectors with large numbers of part-time and lower-paid staff, many of which are female-led. Taxation has become the number one barrier to SME growth, with 61% of firms citing taxes as the biggest obstacle, particularly affecting hospitality and retail sectors with a higher concentration of female-led businesses.
Experts highlight the success of women-led SMEs in other countries, driven by structural support like affordable childcare, investment incentives, and mentoring schemes. The UK government, with support from initiatives like the European Innovation Council, has implemented programs like the EIC Women Leadership Programme and Women TechEU. These efforts have significantly increased investment in female-led companies, from 8% in 2020 to 30% in 2024.
The decline in women-led firms in Britain is a pressing economic issue. Addressing barriers such as access to finance, wage pressures, and taxation is crucial. Building on successful international models and continuing targeted government programs can help reverse this trend, fostering a more inclusive and prosperous business landscape.
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