London leading UK business growth
The British government must identify why the UK regions are being left trailing in the wake of London and the south-east when it comes to starting new businesses, it was said today.
Sir Digby Jones, chairman of the employers’ organisation CBI, called on ministers to address the regional disparities in rates which, he said, were affecting jobs and prosperity across the UK.
He expressed concern at the startling and growing gap in regional rates of new business – London has more firms and companies than Wales, Scotland and Northern Ireland combined and is accelerating ahead.
Mr Jones' call for action was made in an address at the University of Ulster campus at Jordanstown outside Belfast, and was supported in a new report A More Dynamic Start-up Market – the second in a series examining the British government’s small business policy.
Small businesses are responsible for half of all UK jobs and wealth and are fundamental to future economic success, according to the CBI.
But while London has seen a 16% increase in businesses since 1997, the figure for Wales is just 2%. The south-east recorded a 15% rise but Scotland only 5% and Northern Ireland 6%.
Disturbing CBI figures showed the regional gap was increasing, with 62 adults per 10,000 starting their own businesses in London compared to 29 per 10,000 in Scotland, Wales and Northern Ireland.
The discrepancies were played out across England too – the north-west, Yorkshire and Humberside and the north-east all record below average growth of business start-ups since Labour came to power.
Mr Jones said: “New businesses are the key to creating employment, wealth and long-term prosperity – but there is a growing divide between London, the south-east and the rest of the UK.
“The government has tried to bridge the gap but it has still increased. Eight years ago Wales had around one third of the number of businesses as London – the figure is now around one quarter, and on current trends will fall to a fifth by 2020.”
He stressed: “This is clearly unsustainable and the government must determine what is inhibiting entrepreneurs from building their own business, creating jobs for others and contributing to both their own prosperity and that of their community and nation.”
The UK has grown into the fourth largest economy in the world because of its national spirit of enterprise and entrepreneurialism, which had seen businesses constantly started up, he said.
“This freshness and innovation has to be sustained, and sustained across the whole country, and our leaders must realise there is a huge problem and urgently address it,” said Mr Jones.
The downside of London’s surge in business start-ups is that it has the lowest three-year survival rate in Britain.
Northern Ireland has the best survival rate over three years – 72.4% - compared to a British average of 66.5%.
Wales came in at 86%, Scotland 65.3% and London trailed in on just 62.8%.
