A new study by UHY Hacker Young reveals that there has been a 51 per cent increase in the number of new businesses in the UK over the last five years, driven by strong growth in the country’s alternative finance sector, especially peer-to-peer lender and crowdfunding platforms.

The number of startups launched annually in the UK climbed from 385,741 in 2010 to 581,173 in 2014. Lending to SMEs now amounts to £76 billion, the firm’s research shows - 46 per cent of the amount of traditional bank loans. Moreover, UK entrepreneurs take just five days to set up a business, compared to the global average of 20 days.

China comes in first place with a 98 per cent increase in new businesses. Despite its economic slowdown, the number of new business launched annually there soared from 811,100 in 2010 to 1,609,700 in 2014. The UK takes the runner up slot with 51 per cent, followed by India (46 per cent), Italy (45 per cent), Australia (41 per cent), Germany (40 per cent) and France (39 per cent).

But governments cannot afford to ease back on introducing more business-friendly policies, UHY warned: the global impact of the Chinese slowdown still needs to be managed.

UHY partner Colin Jones said:

“The UK has recovered from what were difficult economic conditions and is now a leading nation for encouraging and helping start-ups.

“Small businesses have welcomed the government’s measures to cut their national insurance bills and corporate tax rate.”

He went on to say that government must now strike the right balance between regulating the growing peer-to-peer lender market and encouraging innovation by cutting red tape for entrepreneurs and investors.