Just one UK city creating more new businesses than it’s losing

Publications that covered this article include The Independent, 11 June 2012.

  • Aberdeen only UK city to see new businesses growth
  • London loses net 7,535 businesses
  • UK sees net loss of 62,250 businesses in 2010

Aberdeen was the only major UK city to create more businesses than it lost when the UK emerged from recession in 2010, according to our figures.

Aberdeen, which is currently undergoing a boom thanks to high oil prices, created 3.7 new businesses per 10,000 people in 2010.

By contrast, the research which ranks the Top 50 towns and cities by their ability to create new businesses, found that UK towns and cities witnessed an average loss of 10 businesses per 10,000 people.

Our findings explain that Aberdeen, as the oil capital of Europe, is headquarters to some of the world’s leading international oil & gas service companies.

Edinburgh was the second best performer with a loss of 2.4 businesses per 10,000 people. Manchester took third place with a loss of 2.6 businesses per 10,000 people. (See league table below)

London ranked only 27th amongst the UK’s top 50 major towns and cities, with a new business loss rate of 9.6 businesses per 10,000 people. This is despite a 4% increase in new business creation in 2010 compared to 2009.

Marc Waterman, Partner at our London office, comments: “The boom in oil prices has seen Aberdeen thrive, not just because of the North Sea, but also because it has become a global centre of excellence for oil services companies.”

“The high oil price has also meant more exploration work by the independents, many of whom are based in Aberdeen.”

“The oil boom has also allowed many local entrepreneurs to cash out, selling their companies to private equity investors, or to larger oil companies, creating a growing band of self-made millionaires.”

“With oil prices currently in excess of $100 a barrel, investment is expected to continue to pour into Aberdeen, which will no doubt boost consumer spending in the area.”

“Manchester’s strong performance amongst the Top 50 is no surprise either as the city is renowned for its support of small businesses. Manchester has a real entrepreneurial spirit, which is reflected in the strength of its business and manufacturing sectors.”

“Manchester has been highly successful in attracting new businesses keen to make use of its highly trained but comparatively low cost workforce – including the BBC.”

“While the economies of other major UK cities suffered as a result of the recession, Aberdeen was able to buck the national trend by continuing to create more new businesses than it lost.”

“London, normally the powerhouse of the UK economy, was clearly hobbled by its over-reliance on the financial sector.”

Our analysis shows that new business growth in the UK was sent into rapid decline by the financial crisis, falling from a net creation of eight businesses per 10,000 people in 2008, to a net loss of 10 businesses per 10,000 people in 2010.

This is despite the fact that business creation in the UK has remained consistent. 235,145 new businesses were created in 2010 compared to 236,025 in 2009, yet the number of business closures jumped 7% from 279,180in 2009 to 297,395in 2010.

The net loss of 62,250 businesses in 2010 is a 44% increase on 2009, which saw a net loss of 43,155 businesses and a huge swing from the creation of 46,260 businesses in 2008.

Marc explains: “UK businesses are not just struggling in the face of reduced demand, but also due to restricted access to credit from banks. The reluctance of banks to lend to businesses, particularly SMEs, many of whom are perfectly viable, is sending huge numbers into administration. This is having a knock-on effect throughout the UK economy, which is struggling to get back to growth.”

Top 50 towns and cities in UK by new business creation

Rank

Top 50 Towns and Cities

2010

Number of new businesses created

Number of business closures

Net new businesses 2010

Net new businesses per 10,000 population in 2010

1

Aberdeen City

1,035

955

80

3.7

2

Edinburgh, City of

2,070

2,185

-115

-2.4

3

Manchester

1,960

2,640

-680

-2.6

4

Reading

760

805

-45

-2.9

5

Oxford

430

480

-50

-3.3

6

Luton

640

705

-65

-3.3

7

Ipswich

390

435

-45

-3.5

8

Belfast

850

980

-130

-4.8

9

York UA

665

770

-105

-5.2

10

Plymouth

550

725

-175

-6.8

11

Bristol

1,725

2,045

-320

-7.3

12

Dundee City

345

450

-105

-7.3

13

Norwich

415

520

-105

-7.3

14

Telford and Wrekin UA

430

550

-120

-7.4

15

Swindon

685

835

-150

-7.4

16

Peterborough

585

715

-130

-7.5

17

Leeds

2,830

3,435

-605

-7.6

18

Milton Keynes

1,210

1,395

-185

-7.7

19

Newcastle upon Tyne

725

960

-235

-8.0

20

Middlesbrough UA

300

415

-115

-8.1

21

Stoke-on-Trent

555

750

-195

-8.1

22

Kingston-upon-Hull UA

620

845

-225

-8.5

23

Bradford

1,550

1,990

-440

-8.6

24

Northampton

805

1,000

-195

-9.2

25

Wolverhampton

680

905

-225

-9.4

26

Bolton

955

1,210

-255

-9.6

27

Glasgow City

2,145

2,715

-570

-9.6

28

London

52,755

60,290

-7,535

-9.6

29

Blackpool

445

585

-140

-10.0

30

Coventry

965

1,295

-330

-10.5

31

Nottingham

805

1,140

-335

-10.9

32

Sunderland

475

785

-310

-10.9

33

Liverpool

1,290

1,795

-505

-11.3

34

Stockport

1,150

1,475

-325

-11.4

35

Cardiff

1,020

1,410

-390

-11.4

36

Portsmouth

595

840

-245

-11.8

37

Sandwell

775

1,145

-370

-12.6

38

Birmingham

3,315

4,645

-1,330

-12.8

39

Sheffield

1,440

2,160

-720

-13.0

40

Poole

615

810

-195

-13.7

41

Southampton

660

990

-330

-13.8

42

Walsall

700

1,065

-365

-14.2

43

Kirklees

1,365

1,950

-585

-14.3

44

Dudley

900

1,350

-450

-14.6

45

Derby

690

1,055

-365

-14.8

46

Swansea / Abertawe

570

945

-375

-16.1

47

Bournemouth

670

945

-275

-16.4

48

Leicester

1,040

1,555

-515

-16.8

49

Preston

445

685

-240

-17.8

50

Southend-on-Sea UA

680

1,170

-490

-29.6

UK TOTAL

235,145

297,395

-62,250

-10