The number of startups launched in 2017 dropped more than 10 per cent to just over 589,000 last year, according to figures published today by the Centre for Entrepreneurs (CFE) think tank.
Data from Companies House showed 589,008 new businesses set up shop in 2017, down from 657,790 the previous year. This marked the first drop in business launches since 2010, according to the Office for National Statistics.
The CFE's analysis suggests this was caused in part by the government's clampdown on so-called "disguised employment" among public sector workers.
The measures, which stopped businesses from being classified as contractor accounting firms to avoid tax, came into effect in April 2017.
While the centre concluded Brexit did not have an impact on business startups, it said the combination of business rate rises and other regulatory burdens with "muted encouragement" for entrepreneurs from the current government were discouraging individuals from starting new businesses.
“With business registrations increasing for nearly a decade it is not surprising to see the record streak come to an end” said Matt Smith, the director of the CFE.
“While the tax clampdown is responsible for most of the drop, there is evidence that formations have fallen more than expected.
"To boost startup figures, the government must return to championing entrepreneurship and supporting entrepreneurs, as it did so well under David Cameron," Smith said.