The UK is becoming the "self-employment capital" of Western Europe after an increase in the number of people working for ­themselves, according to a new report.

The IPPR think tank said the country had caught up with the European Union average of 14 per cent of workers who are self-employed.

The number has increased by eight per cent over the past year, faster than in any other western European country, said the report.

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Spencer Thompson, senior economic analyst for IPPR, said: "Around 2,000 people a month are moving off benefits into their own business. The Government's response to the rise in self-employment has been to praise the UK's entrepreneurial zeal, while increasingly promoting self-employment as an option to job-seekers.

"Some have seen it as a negative development, having legitimate concerns whether a lot of the new self-employed are actually employees by another name.

"The self-employed come in many shapes and sizes. Some are entrepreneurs, driven by high-growth ­ambitions, innovation and disruptive business models, but many are sole traders simply looking to get by or small businesses happy to stay at their current level.

"Many older self-employed workers are simply working longer."

The report was published ahead of the latest unemployment figures tomorrow.