The number of people starting their own business in Brighton and Hove fell dramatically this year amid growing anxiety about the state of the economy.

In the three months to March 31, 570 businesses were launched in the city a drop of 15 per cent on the same period last year when 670 companies were formed.

The trend was mirrored across the South-East in which there was a fall of 16 per cent in the number of start-up firms from 20,800 to 17,600, according to figures from Barclays.

The High Street bank said the static housing market and a slowdown in consumer spending had deterred more people from going into business. The outlook for the rest of the year was equally bleak.

Property web site Rightmove warned yesterday that house prices could remain static for several years while the market waits for first-timebuyers' incomes to catch-up with the cost of property.

Earlier this month, the High Street slump the worst for a decade prompted the British Retail Consortium to declare Britain was already in the grips of a "consumer-led recession".

Sarah Weller, small business area manager for Barclays in Brighton, said the figures were disappointing, despite being set against a record number of start-ups last year.

She said: "It seems the fall in consumer spending on the High Street and uncertainty surrounding the housing market are having an effect and are set to dampen start-ups for the remainder of the year."

Clifford Conway, president of the Brighton and Hove Chamber of Commerce, said: "Last year was exceptionally high in terms of the number of start-ups in the city so I suspect these figures would compare more favourably with an average taken over the last three to five years.

"If Brighton and Hove does have a weakness, it is a reliance on the service industry and particularly the business-to-consumer side of the sector. People are obviously being a bit wiser in how they are spending their money but I think it's a bit early to be talking about a consumer-led recession."

Trevor Freeman, chairman of the Brighton and Hove branch of the Federation of Small Business, said small businesses had been hurting for a long time. Cash flow problems and a lack of profitability combined with the cost of renting business premises in Brighton and Hove had stifled growth.

But the underlying reason for many of the problems facing small business was a shift in the economy in favour of the service sector, which supported fewer jobs than manufacturing.

The Barclays survey also revealed that 67 per cent of businesses in the South-East were started by men, 19 per cent by women and 14 per cent by men and women together.

Tuesday, 21 June, 2005