10th June 2021

Third UK Lockdown Produces Wave of Start-ups

The third national UK lockdown produced a wave of start-ups, with arts and crafts the most common type of venture, according to Direct Line business insurance new policy data.

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Third UK Lockdown Produces Wave of Start-ups
  • The third national UK lockdown, starting January 2021, produced a wave of start-ups, with arts and crafts the most popular, according to a Direct Line business insurance analysis of new policy data
  • Nearly a quarter of Brits (22 per cent) have either already started or are planning to set up a new business after the latest phase of UK national restrictions
  • There were 30 per cent more businesses formed during the third national lockdown compared with the first, according to Companies House
  • Young people are flying the entrepreneurial flag, with more than one in three (36 per cent) looking to set up a kitchen table start-up during the latest UK lockdown

The third national UK lockdown produced a wave of start-ups, with arts and crafts the most common type of venture, according to Direct Line business insurance new policy data.

Nearly a quarter (22 per cent) of Brits have either started or are actively planning to set up a start-up, according to a separate Direct Line business insurance survey – three per cent more than those who did so after the pandemic initially hit in spring 2020.

The findings are backed by an analysis of Companies House data, which shows that there was a 30 per cent increase in incorporations of new businesses during the third national lockdown compared with April-June 2020. January to March 2021 saw 211,368 companies newly incorporated, compared with 162,479 during the opening months of the pandemic.

Despite being disproportionately affected by the economic impact of the pandemic, young people are flying the entrepreneurial flag. More than one in three are either actively exploring setting up their own business, or have already done so, fuelling optimism that the national recovery might be led by a youthful generation of entrepreneurs.

There were also some interesting differences between the 2021 findings and last year’s analysis of start-up trends after the first national lockdown, conducted by Direct Line business insurance.


In Spring 2020, the three most popular planned ventures were in IT (21 per cent), engineering (14 per cent) and property (eight per cent). But this year they are much more creative in nature, with survey results revealing that web-design (18 per cent) and arts and crafts (12 per cent) topped the list. Direct Line’s new policy data confirms this trend with arts and crafts being the most common new business venture to have started up since January 2021.

The 2020 survey also showed that many people were deterred from starting a business because of lack of money or investment, with 31 per cent identifying this as the primary reason they didn’t go through with it. General economic uncertainty was also a factor, with 25 per cent saying this was the main barrier to setting up a kitchen table start-up.

But this year’s findings suggest a rapidly changing picture. Of those who started a business during the third national lockdown, but did not do so during the first, 31 per cent have now accrued the necessary savings or funding, and 25 per cent feel the climate is now much more stable.

Underlining this sense of confidence, 76 per cent intend to make their start-up their main source of income. All this suggests growing optimism, which is most likely is connected to the ongoing vaccine rollout.

A cause of concern is that the percentage of new entrepreneurs ranking insurance as important has slightly dipped. Last year, 77 per cent said that taking out cover was a priority, compared with only 71 per cent after the third national lockdown in 2021. This suggests that some new entrepreneurs might be putting their ventures at risk.

Regionally, the top four areas with the most newly established entrepreneurs (those who have started or put plans in place for a new business) were:


  • London (45 per cent)
  • North East (39 per cent)
  • East Midlands (32 per cent)
  • East of England (27 per cent)


Interestingly, three of these four regions were also the most common areas for new start-ups last year, with only the North East a new entry in 2021.


Jane Morgan, SME Product Manager at Direct Line, said: “It is really encouraging to see that the third national lockdown has produced even more start-ups than last Spring, and that so many young people are demonstrating the confidence to set up a new venture, despite what continues to be a challenging climate. 

“Setting up a new business requires financial and emotional investment, so it’s important that entrepreneurs don’t put their new ventures at risk by not taking out comprehensive insurance protection.

“At Direct Line business insurance, we’re committed to providing entrepreneurs with the value and peace of mind they need to grow their business and help drive our economic recovery from the pandemic.”

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