Pan-European benchmark study finds UK is Europe's most entrepreneur-friendly country


A benchmark study, published recently by Arthur Andersen and GrowthPlus, has found that the United Kingdom is doing more than most of its European neighbours to stimulate entrepreneurial activity, and even tops the United States.

The 'Not Just Peanuts' benchmark (full report available on provides comparative data across nine European countries and the USA, detailing current legislation, regulation, taxation and bureaucracy and clearly illustrates the diversity across Europe

The study analysed the factors identified by Europe's fastest growing entrepreneurs as most affecting their ability to grow and develop - such as easy access to funding, minimum bureaucracy or social charges, the availability of a skilled workforce, encouragement of risk taking and creative measures to stimulate growth.

'As is well documented, rapid growth companies are a common feature of the Cambridge scene,' said Nigel Pye, Senior Partner at Arthur Andersen, Cambridge.

'These growth companies bring immense benefits to the communities in which they work, particularly in creating many quality jobs. This study confirms that we are getting much right in the UK to encourage both entrepreneurial activity and the high-growth organisation but, at the same time, we need constant improvement to continue to capitalise on this economic boost.'

The UK performs well in the study, accumulating a total rating of 49 points (out of a possible 60), ahead of the USA with 45 points, and shows that much can be learned from the UK's best practices, including:

  • Only two European countries, the UK and France, provide tax incentives or a special tax regime for private investors, above and beyond regular tax treatments.

  • The UK sets a good example from which other legislations could learn. An investor in a venture capital trust (VCT) may obtain income tax relief of 20% on his investment and capital gains tax relief is applicable.

  • Stock option schemes are widely used by high-growth entrepreneurs. Regulations relating to the tax and social security treatment of such plans vary hugely across Europe and in many countries act as a disincentive to a company to use this remuneration package.

  • The UK actively encourages stock option schemes (Employee Share Ownership Plans), allowing a company to award up to 3,000 tax-free shares to employees. In addition, the company faces no burdensome bureaucracy, which is not the case in most other countries.

  • Taxation on an individual's earnings in Europe varies significantly. The European average tax rate (across the nine countries) applied to a taxable income of Euro 200,000 is 48%. Income tax rates in the UK are the lowest in Europe, with a maximum of 40% applicable to the above income.

  • In the UK a standard limited liability company can be founded in one day, and no nominal share capital is required. In other countries this can take up to four weeks and require up to Euro 35,000 minimum share capital. Of the 28 topics identified by the entrepreneurs surveyed, the UK performs below standard in only one factor.

  • Whilst capital gains tax rates differ widely across the nine European countries, the average is 27.5%. The rate in the UK is 40%, one of the highest rates in Europe.

    Further information: Janet Maskelyne, Arthur Andersen, Betjeman House, 104 Hills Road, Cambridge CB2 1LH. Tel: 01223 353906. E-mail:

    About the study

    The partnership responsible for this report is Arthur Andersen and GrowthPlus. The topics examined are those rated most important by Europe's fast-growth companies, represented by the GrowthPlus network.


    To ensure the accuracy of this study, high growth entrepreneurs, independent legal and financial professionals set the framework and carried out the survey. The topics evaluated are those rated by executives of fast growth companies across Europe. To compare legislation, which varies widely from country to country, experts from Arthur Andersen's network across Europe and the United States have carried out our research, analysis and weighting. Expertise from specialists in human resources, labour law, capital law and tax law from Arthur Andersen guarantees not only the quality of our data but the validity of the interpretation.


    GrowthPlus is a non-profit pan-European organisation headquartered in Brussels. It is independent of government and other institutions. Its focus is on promoting the factors that lead to economic growth and, in particular, the success of fast growth companies. It undertakes regular studies of the fastest growing companies across Europe, looking at performance in financial terms and employment creation.. GrowthPlus is funded by a membership of senior executives in growth companies and sponsoring organisations including Arthur Andersen, Boston Consulting and BMW.

    Arthur Andersen

    Arthur Andersen is a global multidisciplinary professional services firm providing advice to clients through assurance and business advisory, business consulting, global corporate finance, tax and legal services. With over 72,000 employees, Arthur Andersen serves clients in 385 locations in 84 countries. Our website is located at: