Number of start-ups decreasing

In the year 2007 only 860.000 businesses were set up which is the smallest number in seven years. As compared to 2006 there were 230.000 less start-ups. In the new federal lander the decrease amounted to -35 % and to -17 % in the old lander. These figures are based on the Gründungsmonitor 2008 survey the findings of which were presented on Tuesday in Berlin.

Dr. Norbert Irsch who is senior economist with the KfW thinks that cyclical economic development is the main reason for this situation. The strong economic growth in 2006 and 2007 had positive effects on the conditions for setting up a company and the economic upswing then increased demand for new staff. Therefore, many of those who were in general in willing to set up their own businesses finally opted for being employed instead of becoming self-employed.

Another factor is a more restrictive allocation of start-up funds by the Federal Employment Agency to unemployed people. Therefore, there were less incentives to start one’s own business. In total the number of start-ups launched by unemployed people fell by 45.000 to 147.000 in the year 2007.

The number of innovative start-ups also decreased. Thus, in 2007 there were about 106.000 of such start-ups as compared to 127.000 in the year 2006.

The KfW-Gründungsmonitor 2008″is available for free-of-charge download. GERMAN