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UHY Study: Canada business start-ups lag

(November 24, 2015) New business creation in Canada is trailing the global average shows a new study by UHY, the international accounting and consultancy network.

The number of new Canadian businesses created in 2012, the latest year for which data is available, is up just 4% since 2010, compared with the 26% global average increase.

The research revealed that the number of new companies created annually in Canada increased to 25,723 in 2012 from 24,630 (2010). The UHY study reveals that the Canadian rate of acceleration is slower than all of its G7 partners.

Other findings are:

  • China came top in the study, with start-up growth almost doubling (up 98%) since 2010. The United Kingdom was ranked second, with a 51% increase in the number of start-ups, with India third (with a 46% increase).
  • The BRIC economies (Brazil, Russia, India, and China) averaged a 42% increase in the number of new businesses created over the same period, while the G7 averaged a 31% increase.
  • UHY’s study also shows that Western European economies saw a bigger increase in the number of new business ‘births’ compared to other developed economies. The UK, Italy, Germany, and France all had increases in the number of new businesses higher than the G7 average.
  • In contrast, the increase in new business creation over the period was 11% in the USA and 7% in Japan.

Ken Shemie, a partner at the Montreal based firm UHY Victor, states that “Canada’s rate of new business creation is held back by bureaucracy, regulatory hurdles and restricted access to bank funding. Also Canada does not foster and champion entrepreneurship like in other countries.”

UHY says that policymakers in Canada could learn from steps taken by many European countries to encourage business creation. Common measures include changes designed to reduce the amount of tax due from start-ups and small companies, simplify the bureaucratic burden, and keep business taxes low.

Many countries have also found that alternative finance providers help improve start-ups’ access to finance. It is estimated that non-bank funding now accounts for 30% of finance provided to companies across Europe.** An estimated €3 billion of European non-bank funding now takes the form of peer-to-peer lending, crowd-funding and other new models of finance.

UHY points out that to sustain growth in the number of new businesses, as well as to manage the global impact of the slow-down in the Chinese economy, governments cannot afford to slow the introduction of more business-friendly policies.

Ken Shemie concludes: “The traditional Canadian resource based economy will face hardship over the next few years, and governments here need to find ways to help new start-ups to grow into successful businesses, and even the next generation of multi-nationals.”

“Canada should reduce bureaucracy and keep business taxes low. Also we have to encourage Alternative Finance options, grows in importance and profile. This means that regulators face the significant question of how to find a balance in their "old-school" regulatory approach to the sector that gives confidence to potential investors, but does not stifle innovation.”

# Country Number of New Businesses 2010 Number of New Businesses 2014 % Change
1 China 811,100 1,609,700 98
2 United Kingdom 385,741 581,173 51
3 India 67,509 98,437 46
4 Italy 57,253 83,000 45
- BRIC average - - 42
5 Australia 157,667 223,013 41
6 Germany 417,644 585,700 40
7 France 119,319 165,725 39
G7 average - - 31
8 Rep. of Ireland 14,100 17,782 26
9 Spain 76,622 94,955 24
10 Brazil 1,528,248 1,865,183 22
11 UAE 136,841 162,173 19
12 New Zealand 42,530 49,281 16
13 Portugal 31,220 35,568 14
14 United States 505,473 561,488*** 11
15 Netherlands 29,287 32,106*** 10
16 Japan 99,616 106,644 7
17 Russia 399,818 420,500 5
18 Canada 24,630 25,723* 4
19 Romania 122,831 101,619 -17
20 Denmark - 26,408 -
21 Croatia - 15,676 -
22 Jamaica - 1,772 -

*2012, the latest figures available
**AFME (Association for Financial Markets in Europe)
***2013, the latest figures available



UHY Victor LLP is a member of UHY, an international network of independent accounting and consulting firms with offices in major business centres throughout the world. Further information can be found at www.uhyvictor.com .



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