ERC research reveals UK business growth hotspots
30 November 2016
- Coventry and Warwickshire biggest job creators according to new study
- Enterprise Research Centre report shows SMEs should look outside London
- For growing a multimillion-pound turnover Belfast and Aberdeen are better
- Report also suggests we need to focus beyond so-called powerhouses
For business owners, being sent to Coventry might be just what they need to learn about creating jobs.
And when it comes to growing a multimillion-pound turnover, entrepreneurs are better off basing themselves in Belfast and Aberdeen than London.
The surprising findings are revealed in new research published by the Enterprise Research Centre (ERC) in its annual UK Local Growth Dashboard.
Stephen Roper, Professor of Enterprise and Warwick Business School and Director of the ERC said: “What we see in the Growth Dashboard is that firm growth and job creation is spread right across the UK and is not limited to a few cities or regions.
“Nor is it restricted to certain types of ‘fashionable’ high-growth firms – there’s a complex growth pipeline of companies in every corner of the country that have different support needs based on their individual ambitions.
“This is incredibly important to understand if we’re going to create an industrial strategy that capitalises on the strengths we already have without over-focusing on star firms, or regions labelled as ‘powerhouses’.”
It shows that the Midlands city and surrounding Warwickshire beat London into second place in the job creation stakes. Firms in the area created 23,432 net new jobs in 2014-15, the largest number as a proportion of total jobs of any Local Enterprise Partnership (LEP) area, at 7.5 per cent - ahead of London’s 4.0 per cent (although London still created the highest number of jobs, 165,540).
Meanwhile, the fastest-growing start-ups are found in Northern Ireland. In Belfast, 4.4 per cent of companies with starting revenues of less than £500,000 reached £1m turnover over the three-year period 2012-15, more than double the UK average of 1.8 per cent. And for established businesses growing further to £3m+ turnover, North East Scotland led the pack, with 11.5 per cent of firms reaching this milestone against a UK average of 6.2 per cent.
ERC, a consortium of leading university business schools, is the top UK research institute on the drivers behind private sector firm growth. The Dashboard provides the most comprehensive picture of growth among small to medium-sized enterprises (SMEs), which make up 99 per cent of all UK firms. Its key findings were unveiled at ERC’s third annual State of Small Business Britain conference on Nov 30th at The Shard in London.
This year’s conference was focused on the importance of boosting inclusive growth and productivity nationwide in the wake of the Brexit vote. Last week, Chancellor Philip Hammond highlighted the UK’s poor productivity levels, saying that UK average productivity was 30 percentage points behind the US and Germany.
Key findings from the Dashboard show that:
- Overall, UK firms created 709,174 net new jobs in 2014/15, 23 per cent of them in London. This took total private sector employment to a record 21.6m, spread across 2.3m employer enterprises (excluding the self-employed, partnerships and enterprises with zero employees) - also the highest ever.
- The highest numbers of new start-ups are found in London and the South East, but a higher proportion in Cumbria and North East Scotland survive their first three years.
- Fast growing firms are found across the UK, with the highest proportions found in Scotland, Wales, Northern Ireland and London. Businesses in Northern Ireland are far more likely to reach £1m turnover in their first three years than anywhere else in the UK. In England, firms are as likely to do this in Cambridge and Manchester as London.
- Firms ‘stepping up’ from £1-2m turnover to £3m+ in three years are spread widely across the UK. While the Thames Valley and North East Scotland come top, many LEPs in the ‘Northern Powerhouse’ and ‘Midlands Engine’ regions are also doing well, including Lancashire, Derbyshire and Nottinghamshire.
- High Growth Firms (HGFs) - defined by the OECD as companies with 10+ employees recording employment growth of 20 per cent plus per year over three years - are concentrated in London and the South and the North West. These firms make up less than one per cent of all firms, but create around 20 per cent of all private sector jobs.
- Even in regions with low numbers of HGFs, their contribution to job creation can be dramatic: In Outer Belfast, where net job creation is low, they make up just 4.8 per cent of all 10+ firms but created 82.7 per cent of all new jobs over 2012-15.
- As well as Coventry and Warwickshire, other top performing regions for job creation included Cheshire and Warrington and Cornwall. But other regions fared less well: The Tees Valley and Eastern Northern Ireland, including Belfast, saw a net loss of private sector jobs.