The UK has long been known as a hub of innovation and enterprise, with a strong tradition of entrepreneurship driving its economy. Yet, new figures from the Onward think tank paint a more troubling picture of the current state of British entrepreneurialism.

According to their latest report, fear of failure is increasingly holding back aspiring entrepreneurs in the UK, creating what some are calling an “unusually risk-averse” environment. 

Rising fear of failure

The report highlights a worrying trend: more than half (53 percent) of working-age adults in Britain now say fear of failure is preventing them from starting their own business, a significant increase from 44 percent in 2019 and 35 percent in 2016. By comparison, countries like Germany, the US, and the Netherlands are seeing lower levels of fear, with the UK standing out as particularly hesitant.

This growing risk aversion is driven by several factors, including concerns about financial loss, reputational damage, and future job prospects. For many, starting a business seems too daunting in the face of an uncertain economic climate. The report also points to a drop in the number of businesses in the UK, down by 425,000 since 2020, as well as a sharp decline in self-employment, particularly among managers and professionals.

“Just five UK universities rank among the top 100 for producing successful entrepreneurs, compared to ten from California alone. The fear of failure rate in the UK is 20 per cent higher than the global median and the US,” said the think tank Onward, which compiled the report. “This is driven largely by concerns around loss of money, but also by fears of reputational damage. Among growing businesses, the top driver of a fear of failure was the impact it would have on their future job prospects.”

Barriers to growth

Beyond the fear of failure, aspiring entrepreneurs face tangible barriers to starting and scaling businesses, including high costs, bureaucracy, and limited access to finance. 

The Labour Party shadow chancellor Rachel Reeves has pledged to run the “most pro-growth Treasury in history,” to address these issues, with Sir Keir Starmer also saying he wants to made the economy a central focus of Labour’s strategy, emphasising the importance of creating the right conditions for businesses to thrive.

A positive turning point?

While the report paints a challenging picture, it also presents an opportunity for a renewed focus on entrepreneurship. With the right support, the UK could reignite its entrepreneurial spirit and foster a new wave of growth-oriented businesses.

As Kevin Hollinrake, the shadow business secretary, points out, making it easier for businesses to start and grow is essential to driving economic recovery.

 “We must do whatever we can to make it easier for businesses to start and grow. As the report argues, access to finance is the number one issue for businesses who are keen to scale up, if we want to grow the economy that should be our principal focus alongside cutting red tape and making sure we increase incentives to invest.”

By addressing these structural barriers, the UK can empower a new generation of entrepreneurs who are ready to take risks, innovate, and contribute to the country’s long-term economic success.

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