Before proceeding it is important to explain what an economic recession is and clarify the point at which the recession officially hit the UK.

The National Bureau of Economic Research (NBER) define a recession as “ a significant decline in activity spread across the economy, lasting more than a few months, visible in industrial production, employment, real income, and wholesale and retail trade”. Many professionals and experts around the world believe that a true economic recession can only be confirmed if GDP (Gross Domestic Product) growth is negative for a period of two or more consecutive quarters (Recession.Org).

According to the Office for National Statistics, GDP is formed by three activities namely; Output, Income and Expenditure. From the output or production approach – GDP measures the sum of the value added created through the production of goods and services within the economy. GDP from the income approach measures the total income generated by the production of goods and services within the economy. Lastly, GDP from the expenditure approach measures the total expenditures on all finished goods and services produced within the economy. When comparing what GDP is composed of and the NBER definition of an economic recession, it can be seen that the areas it explains the decline occurs in all fall under GDP. Therefore it may be said that an economic recession is a significant decline in GDP lasting more than a few months. This NBER definition gives an idea of what a recession is in terms of its effects on the economy. However, the phrase ‘more than a few months’ may require some clarity. In the FRBSF Economic Letter, the timescale was given to be more than two quarters, that is, six months. According to Andrew Sentance (2008) an external member of the Monetary Policy Committee of the Bank of England, in a Bank of England conference accepts that the accepted definition of a recession occurs when a country experiences a fall in Gross Domestic Product (GDP) for at least two quarters in succession, but further explained that he personally refers to a recession as a fall in GDP “year-on-year.” Whichever the case may be, there is a clear consensus that a recession is when an economy experiences a fall or decline in GDP for at least two quarters.

In order to clarify when the UK began to experience a recession, this paper uses a graph published by the ONS (Fig A above). It shows the quarterly GDP of the UK from 2006 till 2010. When looking at the diagram, it can be seen that the UK experiences consecutive fall in GDP for at least two quarters from the second quarter of 2007. This carries on till the first quarter of 2009. Based on the definitions of the recession above, this ‘ticks all boxes’ as the sign of the kind not only lasts for longer than two quarters but carried on year-on-year. It can therefore be said that the UK began to experience an economic recession from the second quarter of 2007 and lasted till the first quarter of 2009. After the first quarter in 2009, although still in deficit, the UK experiences a growth in GDP.

Numerous studies and research have been carried out over the years, to improve on the understanding of entrepreneurial behaviour and have ultimately added to the increasing body of research of entrepreneurship. In this section, some of these studies will be briefly discussed while the more pertinent cases will be covered in depth. This paper aims to contribute to the discussion about the nature of entrepreneurial behaviour, specifically, during an economic recession and within rural regions. To do this, it focuses mainly on unemployment because it is an almost guaranteed economic reaction to a recession. This paper investigates regional variations because if in reality regions are structured differently, then surely they should in theory react differently. Since entrepreneurial activity has been previously through research linked to unemployment, then perhaps entrepreneurial activity across UK regions should be looked at as a possibility to the regional variation.

Entrepreneurial Activity

According to Schumpeter, entrepreneurs resemble waves of innovation from his book ‘gales of creative destruction.’ The innovative activity is likely to have two impacts; they propel the economy out of recession and, because they induce structural change in otherwise stagnant markets, they stimulate long-run growth (perhaps it may be said that whether in a recession or not, entrepreneurial activity and growth is critical to economic development and economic bailouts). Maybe what Schumpeter was also implying is that the reason why they are important is because they are rarely affected by the economic situation because they are innovators in their own rights by not just identifying opportunity but also creating it.

Entrepreneurs achieve and maintain success through identifying opportunities and taking risks because it is what defines them. Identifying and selecting right opportunities for new businesses are among the most important abilities of a successful entrepreneur (Stevenson et al., 1985). Consequently, explaining the discovery and development of opportunities is a key part of entrepreneurship research (Venkataraman, 1997). Entrepreneurs identify business opportunities to create and deliver value for stakeholders in prospective ventures. While elements of opportunities may be ‘‘recognized,” opportunities are made, not found. Hisrich 1986, mentions accepting risk as one of the characteristics of entrepreneurship; Herber & Link also support this by explaining that ‘entrepreneurship pertains to a risk taker, a creative venture…’ “By definition entrepreneurship requires making investments (time, effort, and money) today without knowing what the distribution of the returns will be tomorrow” (Venkataraman1997). There is a fundamental uncertainty that cannot be insured against or diversified away (Knight, 1921). It is also of their nature to identify opportunities and as a result seize them. “Entrepreneurs may not think of themselves as being any more likely to take risk