With the UK election looming, politicians are busy coming up with innovative ideas to win the support of voters. The idea of encouraging entrepreneurship is widely supported across party lines as it will lead to economic growth. But what practical steps can be taken to achieve this?
Perhaps the UK could look north and take inspiration from the Nordic countries. Below are five Nordic initiatives that could be replicated in the UK.
Start a business at school
In the UK, people can start their own businesses from the age of 16, but a recent study by data firm Beauhurst found that only around 1% of companies are founded by people under the age of 20, and the average age is 36.
Sweden has had a program called Ung Företagsamhet (Junior Achievement) since 1980. Run by a non-profit educational organization of the same name and supported by public and private funding, the program encourages elementary school students to start real businesses, called UF-företag. Around one-third of Swedish high school students take part in the program each year, and the organization says that in the 2023/4 school year, 38,824 students will have started a total of 12,396 companies, a new record.
Students are allowed to spend a set number of hours each week on the companies under the supervision of a specially qualified teacher. These so-called “practice companies” do not have the same legal status as regular companies and cannot, for example, own assets or borrow money. Students share any profits among themselves and report them on tax returns as individuals.
One of Sweden’s best-known tech entrepreneurs credits the plan for inspiring him to start an entrepreneurial spirit: Konrad Bergström, founder of electric boat maker X-Shore and chairman of luxury hygiene and skincare brand Soder, started his own company as a Swedish distributor for surfwear brands as a high school student from 1988 to 1991.
“It allowed me to get involved in the business world while I was still in school,” Bergstrom recalls. “I was given a tax break up to a certain amount of sales, and I’m proud that I made that amount within my first week.”
So did Sweden’s innovative school policies make a difference in a country historically known for big government and high taxes? After all, today Sweden rivals Silicon Valley when it comes to spawning major tech companies, nurturing companies like Spotify, Klarna, SoundCloud, Skype and game developer King.
According to the Global Entrepreneurship Monitor (GEM) 2024 report, around 12.5% of Sweden’s population aged 18-34 are engaged in entrepreneurial activity. A recent European Commission report found that 24% of young people in Sweden believe that people aged 15-30 are interested in starting their own business, above the EU average of 20%.
But the country’s early intervention with teenagers in schools may have produced other notable results: Sweden is one of the world’s top five economies when it comes to supporting female entrepreneurs, according to the same GEM report.So for a generation that grew up with side hustles, is entrepreneurship a substitute for national service?
Offer startup leaves
Swedish policies to encourage entrepreneurship include Tjanstledighet, which means vacation. It’s similar to statutory parental leave for employees, and people use it to take short educational courses or start their own businesses. The aim of the policy is to encourage people to try out business ideas, knowing that a regular job will still be waiting for them.
One successful entrepreneur who has benefited from this is Claudia Gaad, who co-founded the women’s social app gofrendly in 2015. Gaad was a former Stockholm police officer who took a sabbatical to test out a nascent business idea.
“The sabbatical gave me the safety net to test out my ideas, while also giving me the freedom to fail and learn from those failures,” she says. “I owe a lot of the success I’ve had to the sabbatical. It gave me the freedom to start my own business, with the security of knowing I could return to full-time work if I needed to.”
The downside to this system, Bergstrom says, is that six months is often not enough time to determine whether a startup idea is truly viable.
Extending state benefits
In Norway, if you start your own new business you can apply to receive unemployment benefits for up to one year. This policy is administered by NAV, the Norwegian public agency for labour and welfare.
Bjorn Christian Pedersen left a high-paying job at a Norwegian stock-listed technology company in 2019 to start his own technology business coordinating SMS text message alerts for organizations. He credits the scheme with helping him grow his business in the early stages. “It was a big factor in giving me peace of mind when starting my own business,” he says.
A similar policy was implemented in the UK in the 1980s. Called the Enterprise Allowances Scheme (EAS), it offered monthly allowances and grant support to people who had been unemployed for four months, had savings in the bank, and were actively trying to start a business. Critics argued that it was a way to reduce the high unemployment rate at the time, but the scheme also supported many future successful entrepreneurs.
Importing talent
Encouraging entrepreneurship can mean not only cultivating home-grown talent, but also importing it. Since 2015, Denmark has run a scheme called Startup Denmark, which grants residence permits to individuals or small teams of up to three people running a startup.
The venture must be approved by an expert committee appointed by the Danish Business Agency, which evaluates the startup’s innovativeness. Anyone with legal citizenship can apply to set up a base in Denmark on this basis. Around 300 permits have been issued between 2015 and 2023.
Set up prizes
Finland has awarded the Millennium Technology Prize every two years since 2004. The €1 million prize is awarded to individuals working on technology solutions that promote the good of the planet.
Previous winners include Britain’s Tim Berners-Lee for his invention of the World Wide Web, and Australian Professor Martin Green for his work on solar power generation. The prize is judged by a panel of experts appointed by academics from the Academy of Technology Finland, and the nominees’ work often has a business dimension that underpins real-world impact.
Although the initiative does not directly benefit startups, it has received government support so far as it is seen as a symbol of setting the standard for innovation in the country. The initiative also aims to boost Finland’s international reputation in science and technology innovation and make it easier to attract talent to the startup community. It also aims to spark the imagination of young entrepreneurs and encourage them to take up STEM subjects.
