Real Dynamo
Why business dynamism matters, have your say on e-invoicing and R&D tax relief, and welcoming our newest Adviser to the Network
For too long, there has been a chasm between rhetoric and reality – between the way that too many politicians talk and think about growth, and the realities of productivity. It’s time to bridge this gap. It’s time to focus on business dynamism.
To butcher a Paul Krugman quote, business dynamism isn’t everything, but, in the long run, it is almost everything. As the ERC’s State of Small Business Britain Report 2024, which was released this week, clearly states: “The link between business dynamism and productivity growth at the national level is an empirically established fact.”
Business dynamism is the pace at which businesses start up, expand, shrink, or close down. It matters because high dynamism usually goes hand-in-hand with greater innovation, stronger productivity growth, and more job opportunities. When new businesses emerge, and existing firms grow or adapt quickly, it tends to promote competition, fresh ideas, and economic vitality. Conversely, if dynamism wanes – reflected in fewer startups and lower rates of growth – innovation can slow, job creation can stall, and overall economic progress may suffer.
In the UK, Professor Mark Hart has been leading this research for many years. He finds that, on average, about a quarter of UK jobs are either created or destroyed each year. However, the overall job reallocation rate has declined over time, suggesting lower levels of business dynamism. Notably, only 3-5% of existing jobs are created by newly launched businesses (startups), and that proportion has been falling in recent years.
One of the implications for policymakers is the need to think about policies to support wider categories of businesses – whether that’s startups reaching £1 million turnover within three years; established firms growing from £1-2 million turnover to over £3 million; or so-called “productivity heroes” that are increasing revenue per employee while also creating new jobs.
There are debates to be had about how to slice and dice the categories. And there are full-on arguments to be had about the policies needed to support them – where they overlap and where they differ. But there can be no arguing at all about the importance of business dynamism.
We’re planning to do more on this issue. Drop me an email if you’re keen to be involved.
Spring Lose
In case you missed it, we gave our reaction to the Chancellor’s Spring Statement. We covered everything from revised growth forecasts, additional investment pledged for defence capabilities, Making Tax Digital and the consultation on R&D tax relief.
As many of you will know only too well, R&D tax relief is an ongoing debacle. It was a major point of contention at a roundtable we held the day after. In fact, our Research Director Eamonn Ives wants to hear from you if you’ve been stung by recent changes to R&D tax credits.
Two other ongoing bones of contention also cropped up – the impending hike to Employer’s National Insurance Contributions, and forthcoming regulations contained in the Employment Rights Bill.
Group Focus
We are collaborating with Enterprise Nation to deliver a joint response to the Government’s call for evidence on e-invoicing, with a view to understanding how to further promote its use among Britain’s small businesses. We’re looking for views from all sides. If you want to have your say, join our focus group from 12pm to 1pm on 9 April to share your thoughts.
Esprit de Cork
The latest Adviser to join our growing ranks is Julian Cork, COO and Board Member of Landbay, a leading UK prime buy-to-let mortgage lender which he has helped scale the platform to a loan book of over £3.3 billion. As he says:
“Entrepreneurship matters. It is one of the most powerful engines of innovation, job creation, and societal progress. Founders and startups don’t just build businesses, they solve real-world problems, challenge conventions, and drive economic dynamism. For the UK to remain globally competitive, it must continue to be a place where entrepreneurs can thrive – where ambition is supported, innovation is celebrated, and barriers to growth are removed.”
We couldn’t agree more. Find out how you can join Julian as our next Adviser here.
Message from our Partner
Growing businesses often find themselves stuck - too complex for digital banks, yet too fast-moving for traditional ones. That’s where OakNorth comes in. Built for entrepreneurs, by entrepreneurs, we blend the agility of cutting-edge digital banking with the security and expertise of a commercial bank. We operate in the top 1% of commercial banks globally, and we are set up to help businesses thrive.
What sets us apart?
Built for scale – Apply for a business account in minutes and start transacting in days, not weeks.
Flexible account setup – Fee-free accounts - including high-value payments, multi-company management with a single login, payment approvals, and free Visa debit cards for your team.
Competitive savings rates – Earn up to 4.25% AER on business savings.¹
UK-regulated bank – Your eligible deposits are FSCS protected.
A partner, not just a provider – Get direct access to a dedicated Business Partner.
Funding for the future – Access to specialist structured finance designed for ambitious businesses.
Looking to scale your business with a partner who understands growth? Book a chat with one of our Business Partners here or click below to learn more.
¹ 3.10% AER on easy-access savings and 4.25% AER on a separate 95-day notice account. Variable rates correct as of 24-Mar-25.
Here to Help
What is holding back your business from growing? If it’s a policy issue, we will let policymakers know. If it’s not, we may be able to put you in touch with someone from our network who can help.
Our Next Events
Breakfast Roundtable @Blick Rothenberg: The Impact of Upcoming Inheritance Tax Changes on Entrepreneurs and Family Businesses
🗓 Tuesday, 1 April 2025
🕐 8am to 10am
📍 Great Queen Street, London
ℹ️ Join Blick Rothenberg, The Entrepreneurs Network and Steve Rigby for a discussion on the impact of inheritance tax on entrepreneurs in the City
⏩ Request a place
Future of Work: The University Student to Entrepreneur Pipeline
🗓 Wednesday, 23 April 2025
🕐 4pm to 5pm
📍Online
ℹ️ A virtual exchange between universities, business owners and investors to discuss how best to support the future founders currently in education in the UK
⏩ Request a place
News and Views
Rachel Reeves delivered the Spring Statement – pledging more money for defence, less for welfare, and announcing further reforms to boost public sector efficiency
Growth figures for 2026 were slashed in half on previous forecasts, but upgraded for later years
Philip was quoted by Tech.eu in their article summarising the tech world’s verdict on the Statement
We published our twenty-sixth instalment of Three Big Ideas
Tech entrepreneur and investor Tom Adeyoola was selected as the preferred candidate to head up Innovate UK
The Digital Services Tax could be junked in a bid to negotiate a trade deal with the US (Paywall – Financial Times)
University equity stakes in spinouts hit a 10-year low of 16.1%, according to latest data
A new report from the Public Accounts Committee says that out of date technology and poor data puts Britain’s AI ambitions at risk
More lab space is coming to London
Official applications opened for tech companies to showcase themselves at London Tech Week 2025
What is ‘Everythingism’ and why does it hold us back?
Britain Remade’s infrastructure boffin Sam Dumitriu warns about a series of amendments that could derail the Government’s agenda for planning reform
Plans to build a new data centre to support next-generation AI and cloud computing services were unveiled
Being rich is good, actually
Friends of the Network
Robotics in Action: Transforming Industries
🗓 Tuesday, 1 April
🕓 6pm to 9pm
📍 IDEALondon
ℹ️ A panel discussion delving into how startups, researchers, and investors are driving robotics innovations that enhance efficiency, safety, and productivity across a range of fields
⏩ Find out more
Shott Scale Up Accelerator
⏰️ Applications opening on 7 April
🏆 Access prestigious investor networks, £10,000 training budget, high-quality mentors and active community
ℹ️ 12-month programme that develops and strengthens the leadership capabilities of senior decision-makers in high-growth engineering and tech SMEs to scale their business to the next level
⏩ Find out more
Shaping the National Data Library
🗓 10 April
🕓 11am to 12pm
📍 Online
ℹ️ This webinar will explore the vision of the National Data Library, the governance structures, priority datasets, and other considerations to ensure it is a success
⏩ Find out more
10,000 Small Businesses UK Programme
⏰️ Apply by: Monday, 28 April
🗓 Starts in September
🏆 Access prestigious investor networks, £10k training budget, high-quality mentors and active community
ℹ️ 13-week programme for small businesses from all regions, backgrounds and sectors
⏩ Find out more
Works in Progress Invisible College 2025
⏰️ Apply by: Monday, 28 April
🗓 4 to 9 August
📍Cambridge
ℹ️ A week-long seminar for 18–22 year olds on how the world got rich; what’s going wrong with science today; and the political economy of housing, urbanism, and cities
⏩ Find out more
NWEW Accelerator
⏰️ Apply by: 30 April
🏆 Mentoring opportunity with Alison Cork MBE and others
ℹ️ An opportunity for female founders at startups or scaleups
⏩ Find out more
Best wishes,
Philip
Philip Salter
Founder
The Entrepreneurs Network