Those who study people who start their own Businesses tell us that the UK is unique in that while our small business sector is comparable in size to others in Europe, it employs substantially less people. Although the data is quite old, the figures I have seen are small business employees accounting for between 60% of the workforce (France) and 83% (Italy). Apparently, two out of three of those classified as self-employed in Britain do not employ anyone else.

Various theories have been put forward to explain this. It seems clear that in all countries small business owners grow their businesses for the first couple of years. When they feel that sales have grown sufficiently to sustain the business pretty indefinitely, at a level that will provide them with a decent standard of living, they stabilize the business and it stops growing.

Perhaps faced with higher taxes and a more difficult regulatory environment, non-UK businesses are forced to grow to a bigger size and to employ more people in order for the enterprise to be sustainable for the long term. In this way a low tax regime may in fact inhibit economic growth.

There is a lot of controversy at the moment about large UK businesses being taken over by non-UK businesses. This would be much less of a problem if we had a good track record of growing new global scale businesses. Unfortunately, with some notable exceptions, this is not the case. So perhaps it is time to raise the sights of entrepreneurs by raising the taxes levied on them.