The Best Cities to Start a Business in the UK

Every town and city can offer something different to a business, whether that’s a perfect location, industry expertise and guidance, or financial support. Find out the 10 best cities in the UK to start a business, based on a range of factors.

Rhiannon Philps Published on 13 September 2021. Last updated on 17 September 2021.
The Best Cities to Start a Business in the UK

While London has long been the nation’s de facto centre for business activity, recent change has brought significant growth and development to other parts of the country.

The government has set out plans to level up the UK. Under these plans, cities and regions should receive funding – from the Northern Powerhouse Investment Fund for example – to help improve the economy and standards of living across the country. Its Levelling Up scheme could provide some exciting opportunities for UK startups and entrepreneurs wanting to launch new businesses outside London.

The coronavirus pandemic may also have contributed towards a shift in focus away from London. With working from home becoming more common, many individuals and businesses may consider living and working in cities across the UK, without feeling restricted to a certain region.

But despite the rise in remote working, choosing the right location is important for all businesses, whether they work remotely or from an office.

The pandemic has had a devastating effect on the economy, but there were still 810,316 new companies incorporated with Companies House in 2020/21 – 21.8% more than in 2019/20. With many people furloughed or losing their jobs, some will have decided to turn their side-hustles into a full-time business, while others may have started their own business for the first time.

If you are one of those people just starting a business, London isn’t the only city that offers opportunity. Check out our top 10 ranking of the best cities in the UK to start a business outside the capital.

» MORE: How to get startup business grants

What makes a good place to start a business?

To make sure we are all on the same page, we have outlined the major factors we believe make a good city to start a business and looked at a range of data from official sources to work out our ranking. More information on how we created our ranking is at the end of the article.

As every organisation is different, you may need to factor in your own set of unique criteria, but this list should give you a good place to start.

The UK business profile at a glance

  • According to the World Economic League Table for 2020, the UK is the fifth biggest economy in the world.
  • Large air transport systems and transport networks ensure connectivity across the country.
  • The UK is renowned for its world-class education system and for hosting several of the world’s top universities.
  • Extensive digital broadband and telecoms market with smart technologies are increasingly integrated across its major cities.
  • The UK is a leading destination for foreign direct investment (FDI) in Europe.

Where are the top 10 cities to start a business in the UK?

1. Leeds

Business Survival Rate 42.9%
Active Business Population 30,185
Monthly Cost Of One Bed Apartment £720.31
Population Estimate 798,800
Gross Monthly Pay For Workers £1,911.51
Local Universities 4
Nvq Level 4 And Above 239,800

Overview

Leeds is Yorkshire’s largest city and is rapidly making a name for itself as one of the UK’s top business hubs. With the second highest business survival rate and the second largest active business population, Leeds is a good all-round prospect for people wanting to get started in business.

Outside London, Leeds is one of the leading UK cities for financial and legal services, but its economy is diverse with retail, manufacturing, and creative and digital industries also playing an important role. Leeds aims to encourage economic growth in the region even further with its enterprise zone, which offers financial incentives and other support to businesses looking to launch in the city.

With four universities and the second highest number of adults with an NVQ Level 4 qualification or higher, Leeds also offers a good pool of talent that new and existing businesses can draw on.

Leeds is ideally placed for regional and national travel with its motorway networks, and international travel via Leeds Bradford International Airport.

For a greener option, Leeds also has good rail connections that could improve further in the future, thanks to the Northern Powerhouse Rail plan. This project aims to improve rail connections between northern cities, so travel between Leeds and cities such as Newcastle, Manchester and Liverpool could become even easier.

2. Edinburgh

Business Survival Rate 42.1%
Active Business Population 19,400
Monthly Cost Of One Bed Apartment £825.88
Population Estimate 527,600
Gross Monthly Pay For Workers £2,028.30
Local Universities 4
Nvq Level 4 And Above 236,400

Overview

As the capital of Scotland and the seat of the Scottish government, Edinburgh is a major city that has plenty of appeal for prospective business owners. It is a leading financial centre and has thriving digital, science and tech industries, which have developed partly thanks to the internationally renowned University of Edinburgh and initiatives like the Edinburgh BioQuarter.

Edinburgh is also full of historical interest and is a very popular tourist destination, particularly during the city’s arts and cultural festivals in August.

With four universities and the third highest number of people with an NVQ Level 4 qualification or above, Edinburgh has plenty of potential for businesses looking to recruit fresh talent, despite having only the seventh largest population.

It also has the sixth highest business survival rate and the fifth largest active business population.

The cost of living in Edinburgh is relatively high compared to other cities on our list, but it regularly features highly in rankings on quality of life and wellbeing so the extra expense may be worth it.

It is easy to reach Glasgow by car or by train from Edinburgh, and its rail networks open up travel to other locations in the UK, with regular trains to and from London, for example. Edinburgh also has an airport if you need to make business trips abroad or fly to other UK cities.

3. Birmingham

Business Survival Rate 38.3%
Active Business Population 38,370
Monthly Cost Of One Bed Apartment £749.00
Population Estimate 1,140,500
Gross Monthly Pay For Workers £1,655.74
Local Universities 5
Nvq Level 4 And Above £278,900

Overview

Birmingham is the UK city with the largest population outside London. Sometimes referred to as the UK’s “second city”, it grew in significance during the Industrial Revolution and became an important centre of manufacturing and engineering, particularly known for its inventions and innovations.

Today, Birmingham retains an important role in the UK economy. It is home to the Bullring – one of the largest shopping centres in the UK – and a diverse range of industries including finance and insurance, retail, tourism, digital technologies, and more.

With five universities, the highest active business population and the highest number of people with NVQ Level 4 qualifications of the cities we surveyed, Birmingham offers a lot of potential for businesses wanting to set up in the area. However, at 38.3%, the city’s business survival rates are lower than many other cities on the list.

Even though Birmingham is a relatively expensive place to live compared to other cities, it is still a cheaper alternative to London. And with the controversial High Speed 2 (HS2) trainline project underway, travel between the Midlands city and London, as well as other cities, looks set to improve.

Birmingham is also an important city for culture and sport. With many major venues hosting events all year round, there is often something happening that will draw new people to the city. Perhaps most notably, the 2022 Commonwealth Games will be coming to Birmingham, bringing with it some new and exciting opportunities for local businesses.

4. Glasgow

Business Survival Rate 37.3%
Active Business Population 19,415
Monthly Cost Of One Bed Apartment £651.33
Population Estimate 635,600
Gross Monthly Pay For Workers £1,884.38
Local Universities 3
Nvq Level 4 And Above 225,000

Overview

Glasgow is a major Scottish and UK city located on the River Clyde. Historically it was known as an important centre for shipbuilding, heavy industry, manufacturing and engineering, but now has a much more diverse economy. Other key areas in Glasgow’s economy include tourism, financial services and technology.

While it has the lowest business survival rate of the cities in our top 10, Glasgow has the fourth highest active business population and the fourth largest number of people qualified to NVQ Level 4 and above.

The Glasgow City Innovation District is one way the city is aiming to encourage businesses to develop and innovate. It offers businesses access to effective infrastructure, technology and expertise, as well as providing opportunities for collaboration and networking to help accelerate growth.

In 2013, Glasgow received funding to become a ‘future city’. By using open data and smart technology, Glasgow aims to become safer, more sustainable, and develop the economic potential of the city.

But Glasgow is more than just an important economic centre. In 2019, it was ranked the UK’s top cultural and creative city by the European Commission and it has hosted a number of important events, such as the 2014 Commonwealth Games and the 2018 European Championships. These have further helped put Glasgow on the map and made it a popular destination for visitors.

Businesses in Glasgow can benefit from good transport links with nearby Edinburgh, as well as destinations further afield. Its motorway and rail networks allow easy travel to other cities, especially to the west of Scotland and England, while Glasgow International Airport offers both domestic and international flights.

5. Manchester

Business Survival Rate 38.2%
Active Business Population 22,850
Monthly Cost Of One Bed Apartment £852.39
Population Estimate 555,700
Gross Monthly Pay For Workers £2,229.30
Local Universities 2
Nvq Level 4 And Above 185,100

Overview

The home of Old Trafford and Coronation Street, Manchester is one of the major cities in the UK and a challenger to Birmingham’s claim to be the UK’s second city. It rose to prominence in the Industrial Revolution as its textile manufacturing industry flourished. Now the city has a more diverse economy, with significant sectors including finance and professional services and creative, digital and technology industries.

Manchester and nearby Salford are also important locations for media and broadcasting outside of London. MediaCity UK, where many different television and radio programmes are broadcast, is the most notable example of this, so startups in this industry may find Manchester provides an exciting environment for networking and growth.

Manchester ranks highly in a number of areas as it has the third highest active business population and the second highest average monthly salary.

However, the cost of living is higher than some other cities, with a one-bedroom apartment costing £852.39 on average per month, and its business survival rate is one of the lowest on the ranking.

Manchester has two enterprise zones to support businesses in the region. The Oxford Road Corridor is focused on innovation and technology, while Airport City provides businesses with travel links by car, train, tram or plane.

The University of Manchester has also contributed to the city’s economy by offering support and expertise to businesses, and, along with other universities in the city, has brought thousands of students and graduates to the region.

6. Coventry

Business Survival Rate 44.6%
Active Business Population 10,120
Monthly Cost Of One Bed Apartment £717.14
Population Estimate 379,400
Gross Monthly Pay For Workers £2,298.89
Local Universities 2
Nvq Level 4 And Above 93,900

Overview

There is a lot going for the West Midlands city of Coventry as it has the best business survival rate and the best average monthly pay out of all the cities in the survey.

Coventry has a lower active business population and number of people with NVQ Level 4 qualifications, but it also has a smaller population than other cities on this list.

In the late 20th century, Coventry was an important centre of the motor industry. As this industry started to decline, sectors such as advanced manufacturing, low carbon technologies, engineering, and the digital and creative industries became increasingly important to Coventry’s economy.

Coventry and the county of Warwickshire have a particularly strong gaming industry, with more than 50 active games companies operating in the region. So, businesses wanting to break into this sector may find useful networking and collaboration opportunities in Coventry and the surrounding area.

An exciting development for Coventry is its recent appointment as the UK’s City of Culture 2021. This is likely to drive further interest and funding to the city, helping to create even more opportunities for new businesses.

Coventry is close to Birmingham and has good travel connections by rail to London and other cities.

7. Bristol

Business Survival Rate 42.8%
Active Business Population 18,615
Monthly Cost Of One Bed Apartment £918.18
Population Estimate 465,900
Gross Monthly Pay For Workers £2,015.21
Local Universities 2
Nvq Level 4 And Above 167,800

Overview

Located in the west of England, Bristol is an exciting city with lots to attract new businesses. Historically known as an important trading port, the city now has a thriving arts and cultural sector and is home to other industries including creative media, finance, aerospace and electronics.

Our rankings show that Bristol has a number of factors in its favour – placed third for business survival rate, for example.

It also has the sixth largest active business population and the seventh highest number of people qualified to NVQ Level 4 or above, even though it only has the ninth largest population.

Bristol aims to help local businesses in a number of ways. For example, the Bristol Temple Quarter Enterprise Zone is an area of the city that aims to help startups and businesses grow, with incentives such as business rates relief and simpler planning applications.

Bristol is also working to become a leading smart city by improving digital connectivity and its infrastructure.

Aside from business, Bristol offers a good quality of life and is especially appealing to younger generations. In 2017, Bristol was named the best place to live in Britain and, in 2019, it was declared the best place to live outside London for people under the age of 26.

8. Sheffield

Business Survival Rate 41.6%
Active Business Population 16,075
Monthly Cost Of One Bed Apartment £625.95
Population Estimate 589,200
Gross Monthly Pay For Workers £1,821.46
Local Universities 2
Nvq Level 4 And Above 182,300

Overview

Sheffield is another city on this list that made a name for itself during the Industrial Revolution. Once called the “Steel City” because of its steel and iron manufacturing industry, Sheffield’s economy is now more diverse with a strong advanced manufacturing industry, as well as a fast-growing creative and digital sector.

The city is also home to Meadowhall, a major shopping centre that attracts shoppers from across the region, as well as several cultural and sporting venues, such as the Crucible theatre, which have helped to raise Sheffield’s profile and increase its tourism industry.

Of the cities we looked at, Sheffield had the sixth highest population of people with NVQ Level 4 qualifications and had the seventh highest business survival rate.

Sheffield is also one of the more affordable cities to live in as, out of the top 10 cities on our ranking, the cost of a one-bedroom apartment was the second cheapest.

Sheffield has been the focus of various regeneration projects over the years and has an enterprise zone with several sites across the region. These aim to stimulate development of the area and encourage growth of advanced manufacturing, engineering and technology industries in particular.

Transport connections around Sheffield are good, and the HS2 Northern Powerhouse Rail scheme looks set to improve these further.

9. Cardiff

Business Survival Rate 41.4%
Active Business Population 11,545
Monthly Cost Of One Bed Apartment £649.75
Population Estimate 369,200
Gross Monthly Pay For Workers £1,976.78
Local Universities 2
Nvq Level 4 And Above 120,600

Overview

The Welsh capital of Cardiff first established itself as an important port, with a particularly significant role in the coal industry due to the proximity of the South Wales coalfields. Cardiff has always been a key driver of the Welsh economy, and it continues to be so in the 21st century.

Today, Cardiff’s economy is powered by industries including finance and professional services, advanced manufacturing, retail, creative media and tourism. Furthermore, the city is an important centre of sport and culture in Wales and draws in many visitors throughout the year.

Cardiff’s two universities have helped to attract and nurture new talent, and the city has the ninth highest number of people qualified to NVQ Level 4 or above in our rankings.

It also ranks eighth for business survival and sixth for average monthly pay.

Like many of the cities on this list, Cardiff has undergone redevelopment and regeneration, perhaps most famously in Cardiff Bay. And, to further encourage businesses to base themselves in the city, there is a Central Cardiff Enterprise Zone which can offer businesses financial support and other benefits to help them grow.

Cardiff has good rail connections to other Welsh cities, as well as cities in the west and north-west of England like Bristol and Liverpool.

10. Bradford

Business Survival Rate 42.3%
Active Business Population 16,085
Monthly Cost Of One Bed Apartment £460.62
Population Estimate 542,100
Gross Monthly Pay For Workers £1,507.14
Local Universities 1
Nvq Level 4 And Above 114,700

Overview

Bradford, crowned the ‘curry capital of Britain’, is perhaps a more unexpected entry on this list. The West Yorkshire city struggles with high levels of social deprivation, and businesses can help to play their part in tackling this by growing the local economy and providing employment opportunities.

With a young and ethnically diverse population, Bradford’s economy is similarly diverse. Finance, textiles, manufacturing, engineering, electronics and digital are just some of the industries that operate in the city, with support offered to startups looking to launch in the area. For example, there are plans to create several enterprise zones in the city.

In our rankings, Bradford comes fifth for business survival and has the seventh highest active business population.

But the factor that might be most attractive to new businesses is the relatively cheap cost of living, especially when compared to London and other major UK cities. Out of all the cities in our survey, the cost of a one-bedroom apartment was cheapest in Bradford, although it also had the lowest monthly salary.

Bradford is well-connected to other cities in the North and beyond, especially nearby Leeds which came top in our rankings.

» MORE: Discover the top small business grants

About this data

Business survival rate is defined as the percentage of businesses that lasted five years after incorporation between 2014 and 2019.

Active business population refers to the total number of active businesses recorded in March 2020.

Data used in this report has been collected from a number of official sources, as well as industry research and analysis. These include, but are not limited to, National Records of Scotland, Nomis, Northern Ireland Statistics and Research Agency, Numbeo, and Office for National Statistics.

Methodology

We ranked each city on each individual factor of the research (active business population, business survival rate, etc.) from 1-19, 1 being the highest and 19 the lowest. We then added up the points of each city, ranking them in descending order to come up with the top 10.

Image Source: Getty Images

About the author:

Rhiannon is a financial writer for NerdWallet, with a particular interest in personal finance and insurance guides for consumers. Read more

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