Where are firms thriving and barely surviving?

Companies are vital for creating jobs. More firms mean more employment and stronger economies. But enterprises are dynamic. They open and close all the time.

In 2023, the European Union had more than 33 million active enterprises according to Eurostat. 3.5 million new businesses were created that year, while 2.8 million closed down. This equals a birth rate of 10.5% and a death rate of 8.5%. In other words, more firms opened than shut their doors in the EU.

However, these rates vary widely from country to country. So, which nations saw the highest business birth and death rates? And more importantly, where did more companies open than shut down across Europe?

Enterprise birth rates ranged from 6.2% in Austria to 19.6% in Lithuania. Malta, Portugal, Estonia, and France also had birth rates above 14%.

In addition to Austria, Denmark, Italy, Sweden and Belgium, Germany, and Greece recorded the lowest business birth rates, all below 9%.

Enterprise death rates varied from 2.6% in Hungary to 27.5% in Estonia. The rate also exceeded 15% in Ireland, Bulgaria, and Lithuania.

Besides Hungary, Greece, the Netherlands, Austria, and Croatia reported the lowest business death rates.

“The gap between enterprise birth and death rates is a key indicator of economic vitality, reflecting how effectively economies renew themselves through creative destruction,” Prof Jun Du from Aston Business School told Euronews Business.

Among 31 countries, the death rate was higher than the birth rate in eight. Among these eight, Estonia recorded the largest negative gap, with a difference of 13.2 percentage points, meaning almost twice as many businesses closed as opened (23,544 vs. 45,389).

The gap was also 5.8 percentage points in Bulgaria and 4.8 percentage points in Ireland.

Du noted that countries with negative gaps typically face intertwined challenges: the decline of traditional industries without sufficient emergence of new sectors; regulatory and administrative barriers to entry; constrained access to finance; ageing demographics dampening entrepreneurial drive; and increasing market concentration that allows incumbents to obstruct new entrants.

In contrast, Malta recorded the highest positive gap, with 10.5 percentage points. That means about 2.5 times more businesses opened than closed (9,669 vs. 3,726).

The difference was also above 5 percentage points in Croatia, Hungary, Latvia, Norway, Portugal, Romania, and Greece.

Jun Du pointed out that countries with positive gaps tend to display several reinforcing advantages. These include dynamic economic structures with expanding service and technology sectors, streamlined regulations and flexible labour markets, well-developed financial systems that facilitate entrepreneurship, and a cultural tolerance for risk-taking.

Looking at the number of businesses opened and closed, Poland recorded the largest negative gap, at 26,732. France had the highest positive difference, with 164,420 more businesses opened than closed.

Among the EU’s “Big Four” economies, Germany was the only one with a negative rate.

“The headline [More businesses opened than dissolved] is encouraging but disentangling the drivers behind such performance leads to a mixed picture,” Giacomo Fersini, senior economic policy advisor at Eurochambres, and Ben Butters, CEO of Eurochambres, told Euronews Business.

They noted that the Eurostat 2023 data reflects a period marked by the consequences of Russia’s war in Ukraine, the related energy crisis, the withdrawal of pandemic-related support measures, and the normalisation of fiscal policy in 2023.

“Despite this pessimistic framework, the positive gap between enterprise births and deaths in many EU member states reflects the resilience of European SMEs in the face of economic headwinds and the impact of targeted public support and facilitated access to finance,” Fersini and Butters added.

The Eurochambres experts explained that after the pandemic, many businesses in the EU closed or changed their classification, which could help explain why there were more business closures than openings in some countries.

The rates might also be influenced by administrative delays in the registration of new enterprises.

Fersini and Butters emphasised that countries with strong enterprise support ecosystems tend to see higher birth rates and lower mortality among young firms.

A health landscape for new companies often includes active chambers of commerce and industry, efficient and unbureaucratic registration procedures, and insolvency frameworks that enable rapid market re-entry. Other support measures include proactive public–private support mechanisms for SMEs and strong start-up funding frameworks.