London continues to be the best area to start a business

Westminster and Camden rank as the best unitary districts in the UK for startups, based on a study conducted by a merger and acquisitions advisor. conducted a study comparing unitary districts based on the number of new enterprise births, percentage of Year-on-Year business counts growth, business survival rates, average Gross Domestic Household Income (GDHI) per hour worked, and other key indicators.

Based on these indicators, Camden and Barnet were awarded a credit score of 80 and 70.5 out of 100 respectively.

On the opposite end of the spectrum, Merthyr Tydfil in Wales and Inverclyde in Scotland ranked the lowest, with a 40 and 40.11 credit score respectively.

In the study, out of the 20 best unitary districts to fund a business, 10 were based in London. This speaks to the enduring funding gap between the North and the South, despite government efforts to narrow it.

Levelling up or down?

The top unitary district to fund a startup, London’s Westminster, had the highest number of new enterprises in 2022 with 7,145. It also boasts an impressive business survival rate of 46.3%, making it a premier region for business and affluence.

Ranking fourth, Birmingham in the West Midlands is the first non-London district to rank in the top 20. It has a 26.32% business survival rate and has a 70.32 credit score.

On the other side of the coin, Merthyr Tydfil in Wales has a negative YoY growth of -0.49% and scores a low 40 credit score.

These figures paint a picture of the slow yield of the Levelling Up initiative, set forth by the government in 2019 as part of an eight year project to bridge regional economic disparities.

The Levelling Up fund was awarded to over 100 projects this year across England, Wales and Scotland.

Despite the well-intentioned ethos of the policy, a recent investigation by The Guardian found that 95% of local authorities that received funding in the past year were unable to spend all of their share.

This was due to the funds being handed over too late due to bureaucratic hurdles and a hollowing-out of council expertise.

Startups 100 Index exclusive data corroborates this pessimism – London startups receive an average of £15m in early-stage investment, eight times more than the average for companies across the UK.

This disparity is affecting the scalability and sustainability of startups. According to a report by Nucleus, some 55% of SMEs believe regional inequalities are affecting their ability to hire highly skilled workers. Meanwhile, 47% said regional funding gaps are impacting the business financial health.

As inflation is set to stubbornly persist at 6.7% until September 2024 according to Office for National Statistics (ONS) figures, it’s more crucial than ever for small businesses in poorer areas to access funding.

Staying afloat

The Chancellor is set to deliver the Autumn Statement on 22 November. It’s expected he’ll outline the government’s macroeconomic policies for the next coming months, which could significantly shape the economic environment SMEs have to navigate as they struggle to stay afloat.

As corporate tax is expected to stay at 25% and banks scale back funding support for SMEs, small businesses will need to find agile ways of cutting costs and engaging in creative methods of raising money.

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