For some time, London was the capital of small business growth within the country, with a high concentration of entrepreneurial and start-up hubs giving many the opportunity to start their firm within the city. However, as commercial property prices have risen steeply since the end of the recession and regional cities such as Manchester, Birmingham and Edinburgh have invested in similar hubs, start-up and SME growth has begun to level throughout the UK.
According to data released by Barclays, the first quarter saw SME growth in regional areas catch up to the growth recorded in London, with the capital’s 10 per cent rise almost matched by the South West’s 9.3 per cent growth rate. The North West, Yorkshire and South East also took steps to close the gap, achieving growth of 9 per cent, 8.7 per cent and 8.3 per cent respectively.
Managing director at Barclays Business Banking, Sue Hayes, concedes that small business growth remains strongest in London and the South West. However, she points out that as the economic recovery strengthens, it is “leading to a game of catch up by other regions and financial improvements across all industry groups.”
She continues; “Improved job security and more robust house prices are underpinning a rise in consumer confidence.
“These are the two key factors that are directly impacting the growth in income among SMEs.”
The improvements in the property market have certainly had a profound impact upon SME growth, with SMEs in this sector recording a 16.9 per cent increase in year on year business.
Surprisingly, however, manufacturing firms grew by only 4.2 per cent during the year – although this could be due to the fact that growth in the strongly performing manufacturing sector largely centres around large firms such as Jaguar Land Rover and JCB and is yet to filter down to benefit suppliers and smaller firms.
During the first quarter, meanwhile, education related businesses enjoyed an average growth of almost 13 per cent, while those with a connection to the arts grew by 9.2 per cent. Unfortunately, the struggles faced by the retail industry still remain a very real concern for small businesses operating within the UK, with only 5.4 per cent growth recorded.
It seems, then, that initiatives designed to lift SME growth and start-up success in regional areas have begun to take root, with the more balanced levels of growth an extremely positive indicator for the performance of local economies. However, with larger competitors also investing in their consumer bases, the obstacles in the way of SME success remain as challenging as ever.
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