The number of businesses in the UK increased by 212,000 to a record 4.7m in the 12 months to the beginning of last year, according to official figures published yesterday. The data, compiled by the Department for Business, Enterprise and Regulatory Reform, pre-date the start of the credit squeeze. The research shows that the number of self-employed people is increasing faster than companies and partnerships that employ people.

John Wright, national chairman of the Federation of Small Businesses, said the large number of sole traders was an "immense worry" and showed the damage done by increasing regulation. "It is a huge jump from being selfemployed to becoming an employer," he said.