The CBI is calling on the Government to address regional disparities in new business start-up rates which are affecting jobs and prosperity across the UK.
The employers’ organisation is worried by the startling and growing gap in regional rates of new businesses – London has more firms and companies than Wales, Scotland and Northern Ireland combined and is accelerating away.
The call for action was made by CBI Director-General Sir Digby Jones in a new report ‘A More Dynamic Start-up Market’, the second in a series examining the Government’s small business policy.
Small businesses are responsible for half of all UK jobs and wealth and are fundamental to future economic success – but while London has seen a 16% increase in businesses since 1997 in Wales the figure was just 2%. The South East managed a 15% rise but Scotland recorded only a 5% increase and Northern Ireland 6%.
And disturbingly the regional gap is increasing – 62 adults per 10,000 are starting their own business in London compared to 29 per 10,000 in Wales, Scotland and N. Ireland. The UK average is 40 per 10,000.
These discrepancies are evident across England too – the North West, Yorkshire & Humberside, and the North East are all below average in both growth of business numbers since 1997 and start-up rates.
Sir Digby Jones, Director-General of the CBI, 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 significantly. 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.
“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 the nation. “
“The UK has grown into the fourth largest economy in the world because of our national spirit of enterprise and enterpreneurialism which has seen new businesses continually being started up. But 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.”
When it comes to business survival rates over the three years, however, London is the lowest in the country. This could reflect healthy increased competition in London and survival of the fittest firms only.
Northern Ireland‘s businesses have the best survival rate over three years – 72.4% compared to the UK average of 66.5%, Wales manages 68%, Scotland 65.3% and London props up the league with 62.8%.