An ‘East/West divide’ has opened up for business start-ups and growth in the Northern Powerhouse, according to new research.
The Enterprise Research Centre’s Northern Powerhouse Local Growth Dashboard found that, in the most recent available figures (2018), Greater Manchester’s start-up rate was among the highest in the entire UK (58 per 10,000 population).
While other areas of the North West, including Liverpool and Cheshire, also recorded healthy start-ups rates, many areas east of the Pennines lagged behind, with the North East region having the lowest rate of just 19 per 10,000 people.
Greater Manchester also had the highest proportion of start-ups that manage to reach the £1m turnover milestone within three years (2.2 per cent). East of the Pennines, start-up growth was generally slower, with the exception of Sheffield City Region (2.1 per cent).
Among firms scaling from £1m-£2m turnover to more than £3m, Cheshire and Warrington led the pack, with 9.1 per cent of businesses achieving this over the 2015-2018 period. Cumbria (8.6 per cent), Sheffield (7.9 per cent) and Greater Manchester (7.7 per cent) also performed above the UK average (7.4 per cent).
Cheshire and Warrington also had the highest proportion of ‘high-growth firms’ – those growing their headcount by an average of 10 per cent or more over a three-year period. Tees Valley had the lowest proportion of firms falling into this category.
Mark Hart, ERC deputy director and Professor of Small Business and Entrepreneurship at Aston Business School, said: "While the current political rhetoric talks of ‘levelling up’, what we’re seeing in business dynamism terms is a clear ‘east-west divide’ emerging across the Northern Powerhouse region.
"Manchester and some other parts of the North West seem to be forging ahead when it comes to creating a good environment for start-ups and early-stage firm growth. But to the east of the Pennines we’re seeing fewer entrepreneurs and slower growth.
"These findings may strengthen the case for investment in better east-west transport infrastructure. But policymakers also need to study carefully what some Local Enterprise Partnerships are doing to foster an enterprise culture locally and spread best practice.
"If the Northern Powerhouse is going to be a meaningful economic unit, we have to address the inequalities that appear to be leaving its eastern half decidedly under-powered."
