The power of three

Together, governments, entrepreneurs and

corporations can spur growth across the G20

The EY G20 Entrepreneurship Barometer 2013

Country profiles
Argentina
Australia
Brazil
Canada
China
France
Germany
India
Indonesia
Italy
Japan
Mexico
Russia
Saudi Arabia
South Africa
South Korea
Turkey
• United Kingdom
United States
European Union
United Kingdom at a glance

Iain Wilkie Björn Conway

Strategic Growth Markets Government & Public Sector
Leader, UK&I, EY Leader, UK&I, EY

Solid entrepreneurial ecosystem but

concerns in some key areas
Key facts
Overall Barometer ranking Quartile 1
Population 63 million
GNI per capita (PPP) US$35,800
GDP growth 0.3%
Exports as % GDP 32.5%
Source: The World Bank, 2012

Compared with many other G20 countries, the environment for entrepreneurs in the UK is a
favorable one. New and growing ventures operate on a solid foundation of business-friendly
regulations, generous tax subsidies, good availability of skills from a solid education system
and the country’s dynamic financial markets. All of this gives the country an edge and has led
to high levels of new business activity, relative to many other G20 economies.

Given the UK’s difficulties in tackling its high rate of For example, 71% of local entrepreneurs say that the country’s
unemployment and low economic growth, supporting the growth culture is supportive of their efforts. Across the G20, only in
of fast-growing and innovative businesses is vital. Overall, Japan is entrepreneurship encouraged more as a career choice.
entrepreneurial businesses account for 99.9% of all businesses in
However, there is no room for complacency. British entrepreneurs
the UK, and 59.1% of all employment, according to the Federation
still face several tough challenges, especially in relation to funding.
of Small Businesses.1 Crucially, these smaller businesses account
The latest figures from the Bank of England suggest that bank
for two-thirds of all the new jobs created in the UK in an average
lending to smaller ventures contracted in 2012.3 In the survey,
year, according to the University of Nottingham, which highlights
about three in four UK entrepreneurs reported that access to
why it is important to foster and support their growth.2 Of course,
bank loans has deteriorated over the past three years. Just 22%
few of these companies are the innovation-led high-tech start-ups
feel that access to funding in the UK is easy, falling to just 11% for
that gather the most headlines, but rapidly expanding companies
those aged under 40. Despite the UK’s financial sophistication,
that deliver real and sustainable growth across a range of
there are clear challenges in securing funding.
sectors — often dubbed the “gazelles” — are what count most here.
Furthermore, there are signs that the ongoing economic downturn
The underlying preconditions for bolstering the UK’s
has led to a dip in the UK’s performance on various innovation
entrepreneurial ecosystem are already well established.

1
“Small Business Statistics,” Federation of Small Businesses website, fsb.org.uk, accessed 16 June 2013.
2
“Small firms driving UK job creation,” University of Nottingham website, nottingham.ac.uk, accessed 22 June 2013.
3
Bank of England, Trends in Lending: July 2013 (Bank of England, 2013).

2 | The power of three

 Angels 32.7%

Crowdfunding 41.8%

Make your voice heard

Join the
To what debate
extent have access to the following education & training programs improved?

Tweet #G20ey
Informal networks 49%

ey.com/G20ey Mentoring 40%

Specific programs at university/

35%
business schools
Entrepreneurship conferences and seminars 33%

Coaching programs for entrepreneurs 31%

Dedicated entrepreneurship chairs in 29%

SWOT analysis
universities and business schools
Vocational education in school curriculum 29%
Strengths
Corporate engagement with local schools 27%
• The UK provides a business-friendly regulatory
indicators, including the number
Corporate of patents
engagement registered each year. 27%
with start-ups framework and a tax system that is broadly supportive of
Close attention will needGovernment
to be paid to ensure
programs that this trend 25%
supporting entrepreneurship.
entrepreneurship
is reversed. Nevertheless, the country remains an innovation • The country boasts one of the strongest innovation
Training period at schools
leader, with spending and employment on research and13% cultures in the G20, with high levels of R&D spending and
development (R&D) both coming in well above the G20 average. employment.
As befits the country’s strong history of discovery, output of
• The financial services sector is one of Europe’s largest,
scientific and technical journal articles is also high, at more than
and entrepreneurs enjoy solid access to growth and
double the G20 average.
equal weight scores expansion capital.

UK’s pillar scores compared to mature G20 economies average

8
Weaknesses
7
6
• While access to funding is strong in the aggregate, efforts
5 to increase funding to small businesses have struggled.
4
3 • Despite high levels of spending on education, there are
2 weaknesses in tertiary enrollment and in second-level
1
0
vocational education.
in
g ip tio
n rt d
an g
• Asked whether coordinated support has been improving
nd sh e po
fu eur ltur gula sup t
n
io inin or deteriorating, UK entrepreneurs are among the most
to en cu re d a a
ss pr nd te uc tr
cce tre xa di
na Ed pessimistic in the G20.
A En Ta or
Co
UK
Mature economies G20 average Opportunities
Source: EY G20 Entrepreneurship Barometer 2013
• The UK’s strength as an innovation center gives it a strong
position in high value-added industries.
• There is scope to boost direct support for exporters. In
An innovation leader, but with room for 2010, the UK’s export credit agency provided financial
improvement on finance and education support totaling £2.9b, almost none of which went
to entrepreneurial businesses. Its German equivalent
The UK provides its entrepreneurs with a well-developed provided €32.5b, with 73% going to entrepreneurial
ecosystem that continues to evolve in line with efforts to move businesses, according to UK think tank Civitas.4
urs? more new business activity up the value chain. The country has a
strong innovation base, and new tax incentives aim to boost the
commercialization of R&D in the country. From a tax perspective, Threats
the UK is one of the few countries in the G20 that is actively
• A growing number of indicators show signs of economic
lowering its corporate tax rate in order to stimulate business
recovery, but domestic demand may be fragile for some
activity. However, access to funding for local ventures is cited
time, particularly as real earnings have been falling for
as an ongoing concern by entrepreneurs, in particular for small
five years.5
businesses or those started up by younger owners.
• Uncertainty continues to hang over the Eurozone,
a pivotal export market for the UK, although, more
ules encouragingly, the local UK economy appears to be
ding
4
“Proactive export policies needed to target critical emerging markets”, Civitas website,
lity, civitas.org.uk, accessed 27 June 2013. improving.
5
B Maule and A Pugh, “Do Inflation Expectations currently pose a risk to the economy,”
Quarterly Bullettin 2013 Q2 Vol 52 No 2 (Bank of England, 2013).

The power of three | 3

 72%
of entrepreneurs in
the UK think that
access to funding is
difficult

What to watch for

Efforts to boost business lending intensify,

but clear challenges remain
At a headline level, in terms of how accessible funding is for
entrepreneurial ventures, the UK appears to perform well in the
EY G20 Entrepreneurship Barometer 2013. However, with the
economy yet to emerge convincingly from a protracted downturn,
long-standing concerns about the flow of credit to start-up
businesses remain.
On some measures, the UK does well in terms of providing capital
for early stage businesses. For example, The World Economic Forum
rates access to venture capital as 3.4, on a scale from 1=impossible,
to 7=very easy, which compares well to a G20 average of 3.0. But
on access to seed and start-up funding for earlier-stage businesses
more generally, the situation is less positive, with weaker results
reported in the Barometer in areas such as public aid and family
funding.
For later stages of business expansion, banks are typically a key
source of funding. Indeed, given the disproportionate reliance of
smaller businesses on bank lending, much of the policy attention
has been focused in this area. In 2012, the UK Government and the
Bank of England launched the Funding for Lending scheme (FLS).6
The scheme works by providing cheap funding to banks that commit
to increase their lending.
According to the latest UK lending data, despite the introduction
of the FLS, net bank lending to small businesses fell in 2012 and in
the first three months of 2013.7 This doesn’t take account of FLS
revisions in 2013, which sharply increased the incentives for lending
to entrepreneurial businesses, but it highlights that the flow of bank
credit is weaker to large enterprises than to smaller ones. In the EY
G20 Entrepreneurship Barometer 2013, 75% of entrepreneurs in
the UK say that access to bank loans had deteriorated over the past
three years, compared with just 11% who say it has improved.
The Bank of England has suggested that one factor in the dip in
small business lending in 2012 might have been an increase — albeit
from a relatively low base — of the availability of alternative sources
of finance, such as peer-to-peer lending, crowdfunding, angel
investors, venture capital and private equity houses.8
These and other potential alternatives ought to be a focus of
ongoing policy attention, particularly given how crucial the
availability of equity capital is to high-growth businesses. As well as
being a source of funding, a frequent benefit of equity funding is
that it is often provided by investors who have specific expertise that
they can contribute to the business.

Proportion of entrepreneurs citing improvement across access Recent trends in net lending to UK small- and medium-sized
to funding
UKinstruments
Funding environment by growth stage Recent trends
enterprises in net
(in GBP lending to UK SMEs
billion) UK Funding

0.0
IPO 3.6% IPO 3
-0.5
Bank loans 10.9% Bank loans 1
-1.0
Bank loans 10.9% Bank loans 1
-1.5
Private equity 23.6% Private equity
-2.0
Suppliers 7.3% Suppliers 7.3
Expansion -2.5
Customers 9.0% Growth 11 11 11 12 12 12 12 13 Customers 9
2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
Venture capital 21.8% Start-up Venture capital
Source: Bank of England, 2013
Seed
Angels 32.7% Angels
Family 23.6% Family
Public aid 25.4%
Public aid

£2.4b
Microfinance 29.0%
Microfinance
Angels 32.7%
What level of impact factors will have on entrepreneurship culture?
Net drop in bank lending
Angels
Crowdfunding 41.8% in Q4, 2012, following
Crowdfunding
Promotion of the role of entrepreneurs
Source: EY G20 Entrepreneurship Barometerin2013
introduction of new Funding
creating new jobs
for Lending scheme9
Improve communication around
6 entrepreneurs'
R Churm and A Radia, “The Funding success
for Lending stories
Scheme,” Quarterly Review 2012 Q4
Vol 52 No 2 (Bank of England, 2012).
7
Ibid. ft 6 Promote theTocareer opportunities
what extent have access to the following education & training programs improved?
8
Ibid. ft 7 offered by entrepreneurship
9
“Lending drops in Q4 despite Funding for Lending scheme” Financial Planner website,
Informal networks 49%
Government
financialplanneronline.co.uk, accessed 27programs
July 2013. providing
education, funding and profile raising
Mentoring 40%

Specific programs at university/

4 | The power of three G20 focus on and support of
business schools
35%
entrepreneurship
Entrepreneurship conferences and seminars 33%
How the government is helping

The Patent Box Funding for Lending Regional Growth Fund

This is a tax incentive designed
to encourage increased
commercialization of innovation in
the UK. It provides a preferential
10% rate of corporation tax for
any business profits that can
be attributed to patents. This
incentivizes the commercial
exploitation of patents in the UK,
while the Government’s R&D Tax
Credit provides incentives for
businesses to carry out R&D in the
country.
Launch date: 2013
Most relevant pillars:
entrepreneurship culture, tax and
regulation
The Government launched the
Funding for Lending scheme with
the aim of boosting bank lending
to small businesses. Under the
scheme, banks can access cheap
funding if they commit to increase
their lending. The scheme runs
until the end of 2015, and was
revised in 2013 to increase the
incentives for lending.
Launch date: 2012
Most relevant pillar: access to
funding
The Regional Growth Fund (RGF)
provides public funding to support
growth-focused projects and
programs that are also tapping
private sources of investment.
The RGF operates in England until
2016, with a total fund value of
£2.6b ($4.0b) and a minimum bid
threshold of £1m ($1.5m).
Launch date: 2011
Most relevant pillar: access to
funding

Key insight: more than the sum of its parts

Scott Button, Co-Founder and CEO, Unruly Media, UK
Unruly Media works with leading brands to deliver their social entrepreneurs here. Having the company of other people facing
video advertising campaigns. Since it was founded, it has the same challenges staves off loneliness. It has also stopped
operated in London’s flagship technology cluster — the so- us making mistakes as we have grown. As you scale you face
called “Tech City.” Co-Founder and group CEO Scott Button all sorts of organizational and management issues that you’ve
stresses the importance of entrepreneurial ecosystems. never had to deal with before. You can bring in new senior
managers to deal with that, but being here has let us tap into
Unruly Media has been operating out of Silicon Roundabout
some of the same experience, a bit like the benefit you get from
(now rebranded as “Tech City”) since it was founded in 2006.
having experienced investors work with your business.”
Over that time, CEO Scott Button believes that this niche start-
up ecosystem has gone from strength to strength. In December 2012, the British Government committed
£50m to regenerate Silicon Roundabout into Europe’s largest
“The term ‘Silicon Roundabout’ was a bit of a joke initially, but it
indoor “civic space” equipped, among other things, with
has done very well in terms of fostering a sense of community
state-of-the-art 3D-printing technology.12 Button believes
among entrepreneurs here, with sharing and exchange of
that the government should play a continuing role in the
people and ideas,” he explains.” The district has expanded
tech ecosystem’s development. “They can raise the profile of
rapidly in recent years. In early 2013, there were an estimated
Tech City and help develop a sense of identity for high-tech
300 start-up companies there,10 and as recently as 2010 there
entrepreneurs. It just doesn’t have the same kind of status in
were only 85.11
the UK yet that it does in the US. We need top talent drawn to
Button believes that Unruly Media has benefitted considerably entrepreneurship, hungry for success.”
from being located alongside so many similar businesses.
“There is no doubt we have learnt from other high-tech

10
“Tech City: the magic roundabout,” The Guardian website, theguardian.com, accessed 2 July
2013.
11
“London’s Silicon Roundabout,” Wired website, wired.co.uk, accessed 29 June 2013.
12
“London’s moment: The tech cluster in the east of Britain’s capital is on a roll,” Wired website,
wired.co.uk, accessed 29 June 2013.

The power of three | 5

 71%
of entrepreneurs in the
Access to funding UK surveyed believe that
Pillar ranking: 2 improved access to bank
credit would improve
long-term growth in
entrepreneurship
UK entrepreneurs say bank credit is crucial,
but hard to obtain Recent trends in net lending to UK SMEs

0.0
Access to funding United Kingdom G20 average Period -0.5
IPO market activity -1.0

IPO amount invested 0.33 0.22 2009-11 average -1.5

(% of GDP) -2.0

Access to credit -2.5

11 11 11 12 12 12 12 Q13
Domestic credit to private sector 209.5 99.0 2008-10 average Only 4% of local entrepreneurs
2Q 3Q 4Q 1Q 2Q 3Q 4Q 1

(% of GDP) feel that access to IPO

Venture capital availability (Scale of 3.4 3.0 2009-11 average financing has improved over
1=impossible to 7=very easy)
the past three years, while
M&A deal value (% of GDP) 5.8 3.4 2010-12 average
51% say it has deteriorated
Sources: The World Bank, Dealogic, IMF, World Economic Forum What level of impact factors will have on entrepreneurship culture?

The UK performs well in the EY G20 Entrepreneurship Barometer bolster other sources of early stage funding, such as angel investors
Promotion of the role of entrepreneurs
2013 for access to funding. The country leads the G20 on the inand venture
creating capital firms. For example, improved tax incentives for
new jobs
extent of domestic credit in the private sector, with a rate as a risk-taking equity investments, for both entrepreneurs and their
proportion of GDP that is more than double the G20 average. backers, especially
Improve communication around angel investors, ought to be a priority.
entrepreneurs' success stories
However, there are clearly challenges on the ground, with 70% of There are also other means of support available at a government
entrepreneurs describing access to funding as difficult. Younger
Promote the career
level,opportunities
such as reforming procurement processes to make them more
offered
entrepreneurs find it even more difficult with just 11% considering it byworkable
entrepreneurship
for smaller businesses. Recommendations to this effect
easy to access funding. have been
Government programs made elsewhere, such as in Lord Young’s 2012 “Make
providing
education, funding and profile raising
At the heart of the challenge is the fact that bank lending to Business Your Business” report, but not enough change is yet being
entrepreneurial ventures is far more limited than it is to larger, G20 focusseen on the ground.14
on and support of
well-established companies. Local entrepreneurs identified bank entrepreneurship
For more mature businesses, conditions are typically better, but
loans as the most important funding instrument for boosting could still improve. For example, the volume of investment raised
Promotion of the high risk/high return
entrepreneurship over the long term. However, only 11% said dynamics
that ofthrough initial public offerings (IPOs) is above the G20 average, but
entrepreneurship
access to bank loans had improved over the past three years, while concerns remain. Only 4% of local entrepreneurs feel that access
a striking 75% said it had greatly deteriorated. “Access to funding
Improve tolerance to
of business failure has improved over the past three years, while 51%
IPO financing
in the UK is tough. We’ve got to create an ecosystem here with a say it has deteriorated. Nevertheless, there have been positive
broader range of financing options available for entrepreneurs,” 0% 20% 40% 60% 80% 100%
developments in other forms of funding. For example, in 2011, the
argues Young Brits Network’s Alex Mitchell. He advocates looking High-impact Low-impact
Business Growth Fund was set up with £2.5b to make long-term
at regional banks, using a model similar to the Sparkassen model in Medium-impact Don’t know or no opinion
equity investments.15 It seeks to match any capital with experience,
Germany, as one example of how conditions might be improved. advice and insight, and is focused on helping expand the rapidly
In the absence of other formal channels of funding, new types growing “gazelles” that are most valuable for job creation in the UK.
of funding are being made available. For example, 42% of
entrepreneurs cited improvements in crowdfunding, on the back of
a range of new platforms that have emerged in recentOverall,
years,how
such Entrepeneurs’
easy or difficult view on how
is it for entrepreneurs to easy or difficult
currently it is toinaccess
access funding funding country?
your headquarter
as Seedrs, Crowdcube and BankToTheFuture, among others.13 All
this highlights the strong potential for innovation in finance in the Young entrepreneurs Very easy
UK, but more progress is urgently needed. More could be done to (up to 40 years old) Somewhat easy
Somewhat difficult
Very difficult
13
“‘Crowdfunding’ Takes Hold in the U.K.” The Wall Street Journal website, online.wsj.com, All entrepreneurs Don’t know or no opinion
accessed 21 June 2013.
14
Lord Young, Make Business Your Business: Supporting the startup and development of
small business (Crown, 2012). 0% 20% 40% 60% 80% 100%
15
“About us,” Business Growth Fund website, businessgrowthfund.co.uk, accessed 14 June
2013. Source: EY G20 Entrepreneurship Barometer 2013

6 | The power of three

 71%
of local entrepreneurs
Entrepreneurship culture agree that the UK’s culture
Pillar ranking: 6 supports entrepreneurship
compared to a G20 average
of 57%

Strong cultural support for entrepreneurship

and innovation
Entrepreneurship culture United Kingdom G20 average Period

R&D spending (% of GDP) 1.8 1.6 2007-09

average Only 13% of entrepreneurs in
Scientific and technical journal 7.6 3.3 2007-09 the UK see business failure
articles (per 10,000 people) average as a learning opportunity
Cost of resolving insolvency 6.0 11.8 2010-12 compared to the G20 average
(% of estate) average
of 23%
Source: The World Bank

The UK ranks highly among its G20 peers as a supportive place
in which to be an entrepreneur. Seventy-one percent of local
entrepreneurs agree that the UK has a culture that supports
entrepreneurship, compared to a G20 average of 57%.
A wide range of factors underpin this cultural support for UK
entrepreneurs. For example, there is broad cultural appreciation
Just 13% of local entrepreneurs said that business failure is
perceived as a learning opportunity in the UK, compared to
a G20 average of 23%. Accordingly, local entrepreneurs felt
strongly that more could be done to bolster their reputation as job
creators: 62% felt this would have a positive impact on the UK’s
entrepreneurship culture.
Recent trends in net lending to

of famous entrepreneurs such as Richard Branson, as well as from The UK has a strong reputation for innovation, which 0.0 the

prime-time TV shows such as the BBC’s Dragons’ Den. The private Government continues to encourage with new incentives,
-0.5

sector also has a role to play in promoting entrepreneurialism, such as a preferential 10% tax rate (the “Patent Box”),
-1.0 which
with high profile programs such as The EY Entrepreneur of the was introduced in 2013 and which applies to profits -1.5 that are

Year™, a high-profile celebration of entrepreneurial achievement attributable to patents. Overall UK spending on R&D -2.0 is above the

for those who are serious about business and making an G20 average, while the number of scientific and technical
-2.5 journal
11 11 Q11 Q12 Q12 Q12 Q
important contribution. articles published is the third highest after Australia and
2Q 3QCanada.
4 1 2 3 4

Across the G20, only respondents from Japan noted more

favorable attitudes toward entrepreneurship as a career
choice. However, Alex Mitchell, the co-founder of Young Brits
Network, which seeks to provide a global voice for young UK
Entrepreneurs’ views aslevel
What to which factors
of impact willhave
factors will have the highest impact
on entrepreneurship culture?
entrepreneurs, adds that this is also being driven by the high
upon entrepreneurship culture
rates of unemployment in the UK, especially among young
people and minority groups. “The financial crisis, the lack of Promotion of the role of entrepreneurs
in creating new jobs
jobs and opportunities, these are all forcing people to reconsider
entrepreneurship as an opportunity to get into the world of work, Improve communication around
entrepreneurs' success stories
and to create value for themselves,” he says.
Promote the career opportunities
To support these efforts, though, more could be to be done to offered by entrepreneurship
help develop the entrepreneurship culture, for example by not Government programs providing
stigmatizing business failure. While initiatives such as StartUp education, funding and profile raising

Britain will boost rates of new business creation, it is inevitable G20 focus on and support of
that not all of these will succeed. More needs to be done — entrepreneurship

perhaps through the media — to convey the fact that business Promotion of the high risk/high return
failure is often a crucial step on the way to subsequent success for dynamics of entrepreneurship

an entrepreneur. A high-profile example is Dragons’ Den star Peter

Improve tolerance of business failure
Jones, who had to move back in with his parents at the age of 30,
before going on to become a multimillionaire entrepreneur.16 0% 20% 40% 60% 80% 100%
High-impact Low-impact
Medium-impact Don’t know or no opinion
16
“Fame & Fortune: Dragons’ Den star Peter Jones,” The Telegraph website,
telegraph.co.uk, accessed 24 June 2013. Source: EY G20 Entrepreneurship Barometer 2013

The power of three | 7

Overall, how easy or difficult is it for entrepreneurs to currently access funding in your headquarter countr
 Crowdfu
Promotion of the role of entrepreneurs
in creating new jobs

Improve communication around

entrepreneurs' success stories The UK corporation tax
Promote the career opportunities rate is set to continue to
offered by entrepreneurship
decrease — moving from
Government programs providing
education, funding and profile raising 23% in 2013 to 21% in
2014 before decreasing
Tax and regulation
G20 focus on and support of
entrepreneurship to 20% in 2015; this
Promotion of the high risk/high return leaves the UK with one of
Pillar ranking: 4 dynamics of entrepreneurship
the lowest corporate tax
Improve tolerance of business failure rates across the G20
0% 20% 40% 60% 80% 100%

A strong focus on business-friendly rules and High-impact

Medium-impact
Low-impact
Don’t know or no opinion
regulations, but continued progress is needed
Tax and regulation United Kingdom G20 average Period

Ease of starting a business

Overall, how easy or difficult is it for entrepreneurs to currently access funding in your headquarter country?
Start-up procedures (number) 6.0 7.6 2010-12 average

Time to start a business (days) 13 22 2010-12 average

Young entrepreneurs Very easy
(up to 40 years old)
Cost to start a business (% of income per capita) 0.7 9.4 2010-12 average
Somewhat easy
Somewhat difficult
Paid-in minimum capital to start a business (% of income per capita) 0.0 17.9 2010-12 average
Very difficult
All entrepreneurs Don’t know or no opinion
Business regulations
8
Time spent on tax issues (hours) 110
0% 20% 40% 347
60% 80% 100%2010-12 average 7
6
Labor market rigidity 5
4
Cost of firing (weeks of wages) 22 50 2007-09 average 3
2
1
Labor and tax contributions (% of commercial profits) 10.2 24.0 2012
0
Taxation

Total tax rate (taxes and mandatory contributions borne by the 35.5 49.7 2012
business expressed as a share of initiatives
commercial ce
Top five and profit)
organizations that could most improve the long-term growth of entrepreneurs and entrepreneurship in the UK Ac

Indirect tax rate (taxes collected by the company and remitted to 20.0 14.2 2012
Business incubators 45%
the tax authorities)
Entrepreneurial workshops/support meetings 44%
Source: The World Bank
Government start-up/other programs 35%

Entrepreneur clubs and associations 33%

The UK’s position as fourth in the tax and regulation pillar is driven
Teaming/mentoring
by its strength in delivering business-friendly regulations. The costs
and time involved to start a business are both low, for example.
However, our survey responses suggest that entrepreneurs are
wary about wider regulatory trends and increases in red tape, with
just 13% saying things had improved over the last three years,
compared to 44% who said they had deteriorated.
From a tax perspective, however, the UK Government has
made solid progress. It has embarked on a series of cuts to the
corporation tax rate, which will come into full effect over the next
percent of entrepreneurs surveyed indicated that this would have
33%
a medium or high impact to the entrepreneurial ecosystem. The
Government has made progress in this area recently though, such
as through its Patent Box tax incentives for businesses that can
attribute profits to the exploitation of patents.
Which single initiative would most improve taxation in your country for entrepreneurs?
Preferred single initiative to improve taxation
Development of a government agency
to assist new businesses in complying
with tax filing requirements, 5%

two years, but which are already sending a strongly pro-business Reduction of personal Reduction of indirect tax
signal to entrepreneurs. In April 2013, the main corporation tax income tax burden, 35% rates, 11%

rate fell from 24% to 23%. It will be cut again to 21% in 2014 and
to 20% in 2015. This will leave the UK with one of the lowest
corporate tax rates across the G20. This should make a strong Simplification of tax rules
impact as local entrepreneurs prioritized cuts in the corporate tax and regulations regarding
calculation of tax liability,
rate ahead of simplification of existing tax rules (a direct reversal 20%
of sentiment in the US) as the initiative that would do most to
improve the overall tax environment in the UK.
Beyond this, the most popular tax or regulatory change the
Reduction of corporate
Government could introduce to boost entrepreneurship overall income tax burden, 29%
would be to improve tax incentives for innovation. Ninety-five Source: EY G20 Entrepreneurship Barometer 2013

8 | The power of three

unding 41.8%

To what extent have access to the following education & training programs improved?

Informal networks

Mentoring 40%
49%
8/10
UK entrepreneurs think
Education and training Specific programs at university/
business schools
35% students need access
PillarEntrepreneurship
ranking:conferences
6 and seminars 33% to specific training to
Coaching programs for entrepreneurs 31% prepare for setting up
Dedicated entrepreneurship chairs in 29% their own ventures
universities and business schools
Vocational education in school curriculum 29%

A strong educational
Corporate backdrop, but27%clear room
engagement with local schools

for improvement
Corporate engagement with start-ups 27%

Government programs supporting 25%

Education and training entrepreneurship United Kingdom G20 average Period
Training period at schools 13%
Public spending on education (% of GDP) 5.5 4.8 2008-10
average

Secondary school enrollment (total enrollment 100.6 95.0 2008-10 Tertiary enrollment in the UK
expressed as a percentage of the population
of official secondary education age)
average
at 57.8% does not compare as
equal weight scores
Recent trends in net lending to UK SMEs UK Funding environment by growth stage well with other mature G20
Tertiary enrollment (total enrollment 57.8 53.5 2008-10
0 expressed as a percentage of the total average economies, such as the US at
IPO 3.6%
5 population of the five-year age group 89.8% or Australia at 76.0%
following on from secondary school leaving) Bank loans 10.9%
0 (2008–10 average)
Source: The World Bank Bank loans 10.9%
5
Private equity 23.6%
0
The UK performs relatively well in terms of the education and 7.3%
Suppliers 34% cite gains in specific programs at universities and business
5 Expansion
11 1training
1 11 12aspects
12 12 of 1its
2 overall
13 entrepreneurial environment. CustomersOne of9.0% schools.“ There has got to be far more real advice, awareness
0 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Growth
ngthe factors ip
underpinning on this performance
rt is a high
n
level
dVenture of public
capital
and 21.8%
understanding of what Start-up
it is to create a viable business. In the
i h e i o
nd spendingurson lat At about pp
a
e ltu education. su 5.5% of GDP,
tio inthe
n ing UK spends well UK there are already some great
fu r
re
gu Seed examples of entrepreneurship
to ren cu d ed ca tra Angels 32.7%
es
s abovere the G20 xaverage
p an of 4.8%
in
at and enrollment
Ed
u levels are also ecosystems with structure support across the whole journey; the
Ent Ta ord Family 23.6%Wales One Stop Shop Service covers everything from
above average overall. Co Business
UK Public aid mentoring
25.4%and tendering to international trade and employment
However, there is mixed evidence about the degree to which
Mature economies G20 average
Microfinance and is a good
29.0%example of what a joined up approach can look like”
this
reneurship spending is feeding through to support the specific
culture? needs
adds Young Brits Network’s Alex Mitchell.
of entrepreneurs. One measure of output is provided by the
Angels 32.7%
Programme for International Student AssessmentCrowdfunding
(PISA), which But more could be done
41.8%to bolster education and training. In
measures the performance of 15-year-olds in mathematics, particular, corporate engagement with both schools and start-ups
reading and science. Between 2006 and 2009, the UK’s 15-year- could be much stronger, which could further bolster some of the
olds dropped from 17th to 25th in reading, 24th to 28th in gains being seen in areas such as vocational education.
mathematics and 14th to 16th in science.17
When it comes to tertiary education, the pool of skilled talent Proportion of entrepreneurs citing improvement in education and training
To what extent have access to the following education & training programs impro
available has risen sharply as the proportion of the UK labor force programs over the last three years
with a degree or other tertiary-level qualification has increased — Informal networks 49%
up from 26% in 2000 to 37% in 2011.18 But there is still room
for improvement: at 57.8%, the tertiary enrollment ratio is well Mentoring 40%

below the levels of other mature G20 economies, such as the US Specific programs at university/
35%
business schools
(89.8%) or Australia (76.0%).19 This matters, not least because the
education sector is an important source of innovation. Education Entrepreneurship conferences and seminars 33%

sector R&D accounts for 27.2% of total R&D in the UK, well above Coaching programs for entrepreneurs 31%
the average of 22.3% across the other G20 countries.
Dedicated entrepreneurship chairs in 29%
universities and business schools
In terms of sentiment on the ground, local entrepreneurs report
80% 100% Vocational education in school curriculum 29%
improvements in several aspects of education and training. About
pact
one in two (49%) note improvements in informal networks, while Corporate engagement with local schools 27%
now or no opinion
Corporate engagement with start-ups 27%
17
“UK Schools slip down world rankings,” The Guardian website, theguardian.com, accessed
2 July 2013. Government programs supporting 25%
entrepreneurship
18
“Labour force with tertiary education (% of a total),” The World Bank website, data.
worldbank.org, accessed 30 June 2013. Training period at schools 13%

“School enrolment, teriary (% gross),” The World Bank website, data.worldbank.org,

19

nding in your headquarter

accessed country?
30 June 2013. Source: EY G20 Entrepreneurship Barometer 2013

Very easy The power of three | 9

Somewhat easy equal weight scores
Somewhat difficult
 45%
What level of impact factors will have on entrepreneurship culture?

Promotion of the role of entrepreneurs

in creating new jobs

of local entrepreneurs feel

Coordinated support
Improve communication around
that business incubators
entrepreneurs' success stories

Pillar ranking: 17 would do the most to

Promote the career opportunities
offered by entrepreneurship
improve the long-term
growth of entrepreneurship
Government programs providing
education, funding and profile raising
in the UK
G20 focus on and support of
Support levels appear to be slipping entrepreneurship

From mentors and entrepreneur networks through to Promotion of the high risk/high return
dynamics of entrepreneurship
incubators, coordinated support is a vital aspect of the overall
entrepreneurial ecosystem. And it is one that the UK could Improve tolerance of business failure
pay more attention to. This is most clearly the case in relation
to business incubators. While one in two entrepreneurs 0% 20% 40% 60% 80% 100%
surveyed across the G20 report noted that access to business High-impact Low-impact
incubators has improved over the past three years, only half Medium-impact Don’t know or no opinion
as many feel the same in the UK. This is worrying, given that
UK entrepreneurs pointed to business incubators as the top
initiative to boost the long-term growth of entrepreneurship in
the country.
Overall, how easy or difficult is it for entrepreneurs to currently access funding in your headqu
According to Alex Mitchell, the co-founder of Young Brits
Network, which seeks to provide a global voice for young
UK entrepreneurs, one problem is the complicated range Young entrepreneurs Very
(up to 40 years old)
of support vehicles that are available. “There are a lot of Some

high-profile awareness building initiatives, but from direct Some

Very
feedback I’ve had from entrepreneurs there’s a feeling that All entrepreneurs Don’t
there’s almost too many, that they change too often and that
it’s difficult for entrepreneurs to know where to start. When 0% 20% 40% 60% 80% 100%
starting out you are going to be on a steep learning curve and
you are always going to be time poor, so there is a real need to
cut through some of the confusion and ensure information and
initiatives are easy to engage with, easy to access and, where
possible, easy to implement.”
This is not to suggest that progress is not being made at all.
In the UK, 41% of entrepreneurs surveyed believe that there Top five initiatives and organizations that could most improve the
has been improvement in relevant clubs and associations over Top five long-term growth
initiatives and of entrepreneurship
organizations that could most improve the long-term growth of entrepreneurs an

the past three years, which also rate highly as crucial aspects
Business incubators 45%
of support. Nevertheless, the category as a whole is one in
which more work could be done, to ensure that activities are Entrepreneurial workshops/support meetings 44%

aligned, easy to access and complementary. “We need to Government start-up/other programs 35%

encourage and support entrepreneurs. Government can play Entrepreneur clubs and associations 33%
a key role in facilitating that, helping create the conversations Teaming/mentoring 33%
and platforms for entrepreneurs to meet, speak and work
together,” says Mitchell. Source: EY G20 Entrepreneurship Barometer 2013

Which single initiative would most im

Reduction of personal
income tax burden, 35%

10 | The power of three

Rankings table

Ranking Access to Score Entrepreneurship Score Tax and Score Education and Score Coordinated Score
funding culture regulation training support

1 United States 7.12 United States 7.67 Saudi Arabia 6.40 France 6.58 Russia 6.23

2 United Kingdom 6.86 South Korea 7.53 Canada 6.34 Australia 6.53 Mexico 5.89

3 China 6.75 Canada 7.45 South Korea 6.34 United States 6.50 Brazil 5.87

4 Canada 6.62 Japan 7.28 United Kingdom 6.19 South Korea 6.40 Indonesia 5.84

5 Australia 6.48 Australia 7.18 South Africa 6.10 EU 6.25 India 5.76

6 South Africa 5.95 United Kingdom 7.00 Japan 6.07 United Kingdom 5.98 China 5.75

7 Japan 5.81 Germany 6.88 Germany 5.84 Germany 5.89 Turkey 5.66

8 South Korea 5.75 EU 6.07 Australia 5.75 Argentina 5.85 South Africa 5.65

9 Brazil 5.67 France 5.68 Russia 5.65 Canada 5.81 Argentina 5.64

10 Indonesia 5.53 Russia 5.05 EU 5.48 Brazil 5.78 Germany 5.53

11 India 5.48 India 4.95 Turkey 5.45 South Africa 5.67 France 5.41

12 EU 5.41 Brazil 4.88 Indonesia 5.38 Saudi Arabia 5.66 Saudi Arabia 5.39

13 Saudi Arabia 5.25 Italy 4.67 United States 5.33 Italy 5.47 EU 5.37

14 Germany 5.23 South Africa 4.33 Mexico 5.21 Russia 5.46 South Korea 5.36

15 Russia 5.04 Turkey 4.30 France 5.12 Mexico 5.32 Australia 5.31

16 France 4.74 Argentina 4.06 China 5.07 Japan 4.72 Canada 5.29

17 Turkey 4.57 Mexico 3.96 Brazil 4.83 Turkey 4.39 United Kingdom 5.19

18 Mexico 4.42 China 3.88 Italy 4.76 China 4.35 Japan 5.04

19 Italy 4.03 Indonesia 3.80 India 4.39 Indonesia 3.88 Italy 4.97

20 Argentina 3.27 Saudi Arabia 3.38 Argentina 4.31 India 3.49 United States 4.85

About the EY Entrepreneurship Barometer model

The EY G20 Entrepreneurship Barometer
2013 introduces a model for scoring countries
across the five pillars of entrepreneurship.20
The purpose of this model is to help identify
areas of relative strength by country and where
opportunities for improvement lie.
The model is composed of qualitative
information (from our survey of more than
1,500 entrepreneurs) and quantitative data
based upon entrepreneurial conditions across
the G20 economies. For each pillar, excluding
coordinated support, this information is
weighted 50-50 between qualitative and
quantitative inputs. For coordinated support,
given a lack of quantitative indicators, this is
based solely upon the survey responses.
The advantage of integrating both the survey
results and quantitative data is the ability to
provide an assessment of the current level and
the trends in a G20 entrepreneurial ecosystem
based upon local sentiment. To this end, official
statistics (for example, on the average time
taken to start a business or the tax burden)
provide a baseline for each member country.
Survey information is an important
complement to the baseline picture these
statistics provide. Entrepreneurs’ feedback on
the pace of improvement or deterioration in
conditions in their country’s entrepreneurship
ecosystem is incorporated in the model
alongside the hard statistics.
Full details of the Barometer’s methodology
can be found on page 66 in the main EY G20
Entrepreneurship Barometer 2013 report.

Note: As per the G20 membership, this list comprises 19 individual countries and also the European Union (EU), as an additional
20

member. Our rankings show the performance of each country, along with an aggregate performance for the 27 EU Member States.

The power of three | 11

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Contacts
Iain Wilkie
Strategic Growth Markets Leader,
UK&I, EY
+44 207 951 3410
iwilkie@uk.ey.com

Björn Conway
Government & Public Sector
Leader, UK&I, EY
+44 207 951 1749
bconway@uk.ey.com