Business dynamism and market structures

What has happened to dynamism and market structures in the UK, and how has this affected productivity?

This project improves the measurement and analysis of UK productivity by leveraging large-scale business datasets, with a strong focus on real-time, policy-relevant indicators. It addresses a longstanding gap in firm-level market structure data, which is less developed in the UK compared to international sources, particularly in relation to trade.

Using Companies House administrative data, we aim to develop a higher-frequency (quarterly) measure of business dynamism, comparable to the Business Formation Statistics (BFS) and the Longitudinal Business Database (LBD) produced by the US Bureau of the Census. This will complement and enhance existing UK datasets that traditionally lag behind real-world developments.

In the longer term, the project aims to develop a broader Business Dynamism Index for the UK, combining entry, exit, insolvency, and patent data, and linking dynamism measures more directly to productivity outcomes.

We will extend our work on real-time measures of business dynamism and entrepreneurship using Companies House data, covering incorporations and dissolution filings, and complement these with administrative records of formal insolvency procedures from the Insolvency Service (e.g., liquidations and administrations). These event-based measures will be integrated with ONS’s UK Longitudinal Business Database (LBD).

The creation of new entry and exit data for UK firms aligns closely with the Productivity Institute’s Productivity Lab, which develops broader real-time indicators of productivity. We will also explore subnational variations in business dynamism, and how these are linked to spatial inequalities and shifting trade patterns.

Alongside this, we will launch a research programme examining the UK’s market structure and its relationship to productivity, using the latest advances in production function estimation (Ackerberg, Caves, and Frazer (2015); Gandhi, Navarro, and Rivers (2020)). This will use firm-level data from the Annual Respondents Database (ARDx) and the Annual Business Survey (ABS).

An important output will be firm-level measures of total factor productivity (TFP), complementing ONS’s work and supporting broader efforts to understand rising market power and declining business dynamism across advanced economies. The project will also contribute to developing microdata infrastructure (MDI) for the UK, facilitating wider research access and enhancing international business microdata comparisons through CompNet.

Research on aggregate productivity decompositions using structural business surveys shows that the productivity puzzle is roughly equally driven by reduced worker reallocation across businesses and slower productivity growth within businesses. More comprehensive longitudinal data would enhance this analysis. The choice of decomposition formula also significantly affects results, as each highlights different aspects of growth.

Findings on real-time business dynamism:

• Company registrations are a leading indicator of both official data and broader economic activity.
• Company entry shocks raise employment, productivity and output. This finding is robust on multiple shock identifications.
• Real-time company entry data can provide early signals to policymakers.

Analysis of the gender pay gap finds that more productive firms report larger gaps, mainly because women are under-represented at the top of the pay scale.

View the UK Firm Dynamics Dashboard produced as part of this research.

This project addresses key measurement challenges and infrastructure development, creating new opportunities for research that highlights the vital role of improved measurement in shaping public policy decisions.

It is highly policy-relevant and closely aligned with ONS initiatives on business dynamism, including recent collaborations with the Department for Business and Trade (DBT). The project also strengthens broader research partnerships through ESCoE and contributes to international initiatives such as CompNet, which promote cross-country comparisons using microdata.

The research will inform the development and evaluation of industrial strategy and expand opportunities for productivity analysis, benefiting both academic researchers and government analysts.

Galanakis, Y. and Savagar, A., ‘UK Firm Dynamics Dashboard‘, November 2025.

Galanakis, Y. and Savagar, A., ‘Tracking the economy through firm creation: Evidence from real-time administrative data‘ ESCoE Discussion Paper Series, ESCoE DP 2025-18, 14 November 2025.

Galanakis, Y. and Savagar, A., `Real-time Firm Entry and the Macroeconomy: Evidence from UK Administrative Data’, Productivity Research Conference 2025, The Productivity Institute University of Manchester, 4-5 September 2025.

Galankis, Y., ‘Real-time business dynamism’, UNSW-ESCoE Conference on Economic Measurement 2024, UNSW Sydney, 25-26 November 2024.

Black, R., ‘Aggregate productivity decompositions using structural business surveys: Evidence from the UK’, UNSW-ESCoE Conference on Economic Measurement 2024, UNSW Sydney, 25-26 November 2024.

Savagar, A. and Galanakis, Y. ‘Real-time Business Dynamism’ Contributed session B: Firm productivity and markups, ESCoE Conference on Economic Measurement 2024, ESCoE Conference on Economic Measurement, Alliance Business School, University of Manchester 15-17 May 2024.

Galanakis, Y. and Gosling, A. ‘Mind the (Gender Pay) Gap: The role of Board Gender Composition’ The Productivity Institute Working Paper, No. 45, April 2024.

Riley, R. ‘Business Dynamism: is turbulence good for productivity?’ Productivity Puzzles Podcast hosted by Bart Van Ark, The Productivity Institute, S2 Ep.13, 27 February 2024.

Galanakis, Y. ‘Mind the (Gender Pay) Gap: Firm Productivity and Board Gender Composition’ Session C, Colloquium on Personnel Economics 2024, Zurich, 15-16 February 2024.

Galanakis, Y. ‘Mind the (Gender Pay) Gap: Firm Productivity and Board Gender Composition’ Gender Gaps Conference 2023, Group for Research in Applied Economics, University of Warsaw, 11-12 September 2023

Galanakis, Y. ‘Mind the (Gender Pay) Gap: Firm Productivity and Board Gender Composition’ Session A1: Pay Gaps and Earnings, Work, Pensions and Labour Economics Study Group Annual conference, Sheffield, 18 July 2023

Galanakis, Y. ‘Mind the (Gender Pay) Gap: Firm Productivity and Board Gender Composition’ Contributed Session O: New applications of firm-level data’ ESCoE Conference on Economic Measurement 2023, King’s College London 17-19 May 2023.