Scotland lags 80% behind rest of the UK for new business creation

Publications that covered this story include The Scotsman on 13 March.
  • More help for businesses needed from both Central and Devolved Government for Scottish entrepreneurs
  • Aberdeen is worst performing major UK city

Scotland is lagging behind the rest of the UK in terms of the number of new businesses created, and is home to all five of worst performing areas out of the 362 UK areas studied on this criterion, our research shows.

The net number of new businesses created in Scotland is 2.4 (net of closures), per 10,000 population – less than a fifth of the UK average, which has a net 13.2 new businesses being started per 10,000 population.

The low number of new businesses started in Scotland suggests that more assistance needs to be given by both Central Government and the Scottish Devolved Government to Scottish entrepreneurs.

A paucity of headline grabbing pro-business policies aimed at Scotland that would really motivate entrepreneurs.

South of the border flagship projects like ‘Silicon Roundabout’ in Shoreditch and the ‘Northern Powerhouse’ have both received substantial political backing and acted as a spur to entrepreneurs.

Aberdeen is the UK’s worst performing major city- 362nd out of the 362 areas – for new businesses created with nearly 18 more business closing than opening in the city over the last year*, per 10,000 population. The ‘Granite City’ placed fifth worst of all UK areas.

This is attributed in part to Aberdeen’s particular problem in the downturn in oil markets over the long term, which has impacted the generation of new businesses and jobs in the city.

Aberdeen – the UK’s North Sea oil hub – has felt the effects of the oil sector downturn worse than anywhere else. A recent report suggested that 5,500 jobs will be lost over the next decade as a result of the downturn. Another study found that insolvencies in the oil & gas sector hit a five-year high last year.

Jon Warsop, Group Chairman, says: “The number of net new business creation in Scotland should serve as a wake-up call to politicians on both sides of the border.”

“While the Government’s eyes have been focused elsewhere, they have let Scottish businesses lag far behind.”

“Oil has historically been a driving force in Scotland, but the Government now needs to be more proactive in business and job creation.”

Our research for the previous year shows that areas in Scotland, Wales, and Northern Ireland dominated the bottom of the rankings for the number of new businesses created. 18/20 of the worst-performing areas for the generation of new businesses were in the ‘Celtic fringe.’

Aberdeen was the fifth-worst performing area for new business creation last year* – net number of new businesses created:

Rank Location Net number of new businesses created per 10,000 population
362nd out of 362 Clackmannanshire -537.5
361st Na h-Eileanan Siar -133.8
360th Fife -49.1
359th Falkirk -33.9
358th Aberdeen City -17.8
Scotland average 2.4
UK average 13.2
*2016, latest year available