George Derbyshire told BBC Radio 5 Live’s Wake up to Money programme that between 2006 and 2007 there was a rise in the number of people setting up small businesses but there was also an increase in the number of small firms failing.

These figures are ‘the continuation of a trend we’ve seen for quite a long time’, he says, adding that planning, preparation and outside advice are the key to small business survival.

Derbyshire comments that more people are interested in setting up their own businesses, particularly among younger people and the older generation, something he describes as positive.

Yet for the last 18 months more people are closing their firms than starting up, illustrating that potential entrepreneurs are ‘getting cautious’, he notes.

According to Barclays, a record 471,500 new businesses started trading in 2007. Barclays first began measuring the number of new businesses in 1988 and has seen an increase of 17 per cent in that time.