Starting and running your own business

Entrepreneurship Amid Economic Strain

The UK economy in February 2026 shows modest growth forecasts around 1-1.4% for the year, with inflation easing toward the 2% target by mid-year thanks to energy price measures, but persistent pressures linger. Unemployment stands at 5.2% in late 2025 data, a five-year high, with private sector pay growth flatlining near inflation levels, squeezing real incomes and eroding job security.

This backdrop fuels a sharp rise in self-employment aspirations. Surveys indicate 66% of Brits are considering or planning a business or side hustle in 2026, up significantly from prior years, with one-third committing to launch within 12 months—a doubling from 2025. Financial control and flexibility drive this shift, as traditional employment offers less certainty.

Business formation remains robust nationally, with hundreds of thousands of new registrations annually, though regional variations appear stark. Wales saw private sector business numbers drop notably in recent estimates, contrasting with steadier or growing figures elsewhere in the UK, yet entrepreneurial activity there aligns closely with national rates around 10-11%.

Non-obvious tensions include the divide between necessity-driven ventures—often micro or solo operations relying on local networks—and ambitious, growth-oriented startups less tied to immediate community support. Access to finance stays a chronic barrier, despite government strategies aiming to improve it. Optimism among entrepreneurs themselves bucks broader business confidence gloom, with many founders positive about their prospects even as wider economic indicators falter.

Stakes are tangible: inaction risks prolonged income stagnation or reliance on insecure employment, while starting a business carries failure costs but offers potential autonomy in a labour market where hiring has slowed and redundancies loom in some sectors.