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Northern growth not just about cities

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Companies across the North of England are seeing strong growth and job creation – and the phenomenon is not limited to the major cities.

The findings have been revealed by the Enterprise Research Centre in its annual UK Local Growth Dashboard. ERC, a consortium of leading university business schools, is the leading UK research authority on the drivers behind private sector firm growth.

The Dashboard shows that firms across the North of England created 125,735 net new jobs in 2014/15 – 18% of the UK total of 709,174.

The North’s top performing Local Enterprise Partnership (LEP) for job creation was Cheshire and Warrington, with a net job creation rate equal to 5.2% of its existing stock – the second highest level in the country after Coventry and Warwickshire and ahead of London.

The three Northern city-regions of Manchester, Leeds and Liverpool exhibit high rates of start-up on a par with the South East.

Leeds and Liverpool, meanwhile, have some of the highest proportions of fast-growing firms in the country – companies that increased their employees by 20% or more per year over the period 2012-15.

When it comes to scaling up, 2.3% of Sheffield start-ups with revenues of less than £500,000 reached £1m turnover in their first three years over 2012-15 – the highest in the region and above the UK average of 1.8%. But this was still well behind the best performing area, Belfast, where 4.4% of firms achieved this feat.

For firms stepping up from £1m-£2m turnover to £3m or more, the best performing Northern region is Lancashire, where 7% of firms in that category reached this milestone.

Looking at OECD-defined High Growth Firms (HGFs) – companies with 10+ employees recording employment growth of 20%+ per year over three years – these firms created between 40% and 60% of all net new jobs in Liverpool, Sheffield, the Tees Valley and Humber LEPs, despite forming a tiny fraction of all firms.

The Dashboard provides the most comprehensive picture of growth among small to medium sized enterprises (SMEs), which make up 99% of all UK firms. Its key findings were unveiled at ERC’s third annual State of Small Business Britain conference held at The Shard in London. This year’s conference focused on the importance of boosting inclusive growth and productivity nationwide in the wake of the Brexit vote.

Professor Mark Hart, Deputy Director of ERC, said:

“What we see in the Growth Dashboard is that firm growth and job creation is spread right across the UK and is not limited to a few cities or regions.

“Nor is it restricted to certain types of ‘fashionable’ high-growth firms – there’s a complex growth pipeline of companies in every corner of the country that have different support needs based on their individual ambitions.

“This is incredibly important to understand if we’re going to create an industrial strategy that capitalises on the strengths we already have without over-focusing on star firms, or regions labelled as ‘powerhouses’.”

Commenting on the impact the vote to leave the European Union would have on SMEs, Prof Hart added:

“While the Brexit vote has created uncertainty for SMEs, our research shows that the most innovative firms find ways to grow despite shocks to the economy – chiefly by focusing on their productivity and looking to export markets to provide new opportunities.

“That’s not to say everything will be plain sailing, though. In particular, we need to ensure a business-friendly approach to skilled migration because we know that many firms struggle to plug skills gaps in specialised sectors like engineering.

“The Growth Dashboard shows us that we have broad-based growth across the UK. The challenge now is for the government to make the terms of our disengagement and future relationship with the EU clear so that entrepreneurs have a stable framework for further expansion.”