A survey recently published by global accounting and consultancy group, UHY, has found that while business start-ups in Dubai declined 4.8% over the overall study period of 2006-10, new business launches jumped 53.1% in 2010.

Rajiv Saxena, Managing Partner of UHY in UAE (Dubai) explained that: “Dubai suffered a severe property slump during the credit crunch, and a significant number of state-backed entities were forced to restructure their debt. Confidence in the economy has revived in the past year, however, political instability elsewhere in the Middle East has led to an influx of foreign businesses into Dubai.”

Overall, the survey, which looked at the situation with regard to start-ups on a worldwide basis, found that in the BRIC countries (Brazil, Russia, India and China), businesses were launched around 40 times faster than in other countries.

The poll looked at new business registration information over several years in 19 countries in which it has operations, and found that BRIC nations are, on average, creating 18% more new businesses per annum compared to non-BRIC nations, which are creating just 0.4% more new businesses per annum.

The accounting firm suggested that despite governments throughout the world talking up the importance of small businesses as drivers of economic growth, some countries to do more to help new business startups, which in many countries are struggling with low demand and restricted access to bank finance.

According to UHY, the country with the fastest increase in new small businesses launched over the period in question was Russia, which saw a 25.6% annual increase over the last five years. Nearly 3.2 million new businesses were registered in Russia in 2010, compared to 1.3 million in 2006.

On the other side of the coin, the country which was found to have the biggest slowdown in the rate of new business creation was Spain. The annual growth rate over the last five years was minus 14.6%, with 76,622 new companies created in Spain in 2010, compared to 143,859 in 2006.

Commenting on the survey results, John Wolfgang, chairman of UHY observed that:

“The difference in the rate at which new startups are being created is quite staggering, with the number of new incorporations decreasing for about half of the countries in our study. The BRIC nations are all in the top half of the table, while among the G8, only Canada, France and Russia have seen an increase in new startup formations over the last five years."

“Small businesses are often considered the engine of growth and employment and therefore critical to economic prosperity. Many governments - particularly in the West - are under pressure to increase tax revenues to reduce public deficits. Unlike large multinationals, which can shift economic activity to low tax jurisdictions, the tax burden falls disproportionately on small businesses."

He continued:

“While just three out of the 19 countries surveyed continued to see a decrease in new startups over the last year, the concern now is what impact the ongoing eurozone crisis is having on new business creation. The uncertainty is almost certainly having a chilling effect.”

But concluded on a more optimistic note that: “Governments can do more to encourage business startups. Many of the respondents to our study highlighted high taxes and complex employment regulations as barriers to growth for small businesses.”