The Best Regions to Start a Business in the UK

Concerted efforts by the government and local authorities have opened up the UK for business, putting previously unpopular regions squarely on the map.

Nic Redfern Last updated on 20 November 2019.
The Best Regions to Start a Business in the UK

While London is the fulcrum of the UK economy, many other regions in the UK are flourishing, and business owners are increasingly setting their sights away from London, and the South East as a whole. Despite large areas of the nation being written off, the UK’s towns, cities and regions are open for business.

There are many challengers to London’s throne, both emerging and long standing. The Northern regions, particularly Yorkshire and the Humber and the North West, remain hugely influential to the UK economy. Moving south, the Midlands should be very attractive to prospective business owners. Birmingham, the Midlands focal point – often referred to as the UK’s ‘second city’ – claimed first place in 2019 in our best cities to start a business in the UK guide, highlighting the wealth of opportunity in the region. (Update: it was still ranked third in our Best cities to start a business in the UK guide, published in 2021.)

London and the South East may be the strongest contributors to the UK economy, but there are several factors to consider when starting a new business that mean other areas might actually have more to offer new companies.

This guide, building on our best cities to start a business report, outlines the criteria business owners should consider when asking the question of where to start a business and analyses where different industries are thriving around the country.

Thinking of starting your own business? Get started by comparing business bank accounts and business loans.

Top 5 Regions in the UK to Start a Business 2019

  1. West Midlands
  2. Yorkshire and the Humber
  3. Scotland
  4. East Midlands
  5. South West

How we compared the regions

When gauging places to start a business, owners will need to consider a range of factors from access to funding, growth opportunities, costs and labour force. We formulated our regional ranking by combining a range of quantifiable data sets from official sources.

  • Business prospects – Business survival rates, entrepreneurship, access to funding and grants
  • Education level – Number of universities, access to talent (NVQ Level 4 and above)
  • Cost and earnings – Average full-time weekly earnings, cost of renting a one-bedroom apartment, cost of commercial premises
  • People – Population, number of working adults
  • Infrastructure – Connectedness of region (air, road, rail), access to commercial property
  • Growth and development – Planned infrastructure, businesses seeking finance

The data we used:

  • Business survival rate is a measure of business security expressed as a percentage. Business survival is the number of businesses which lasted five years from founding between 2012-2017.
  • Active business population refers to the number of active businesses in 2017.
  • Data has been collected from industry research and analysis and official data sources, including Nomis, Office for National Statistics, Numbeo, Colliers, Centre for Cities, Huawei and Office for Students.

Top ranking UK cities to start a business

West Midlands

KEY STATS

Business survival rate

44.4%

Active business population

230,100

Commercial property rent (per sq ft)

Birmingham £33

Coventry £17

Wolverhampton £16

Stoke-on-Trent £17

Regional average £20.75

Cost of one-bed apartment (per calendar month)

Birmingham £734

Coventry £653.08

Wolverhampton £525

Stoke-on-Trent £411.67

Regional average £580.94

Population estimate

5,860,506 (as of mid-2017)

Weekly pay for workers (gross per week)

£536.60

Local universities

11

NVQ Level 4 and above

1,188,400

SUMMARY

Our ranking system has found that the West Midlands is the best UK region to start a new business. This is unsurprising as Birmingham was featured as the best city to open a new business in 2019. [Update: it was still the third best city to open a new business in our companion piece published in October 2021].

The West Midlands is a thriving region boasting the UK’s ‘second city’ Birmingham as the jewel in its crown. In terms of UK regions, at the time of writing the West Midlands is the fourth most populous, comprising the UK’s second largest urban population of Birmingham, and medium sized cities Coventry and Wolverhampton.

Birmingham has long been the connecting point from South to North. The city owes much of its current economic success to its glorious manufacturing past, set into motion by the industrial revolution which it birthed.

Today, Birmingham and the entire West Midlands is a sought-after destination for many businesses due to its convenient transport links. Phase one of HS2, the high-speed rail project will act as a catalyst to accelerate growth in the region when it is scheduled to open between 2029 and 2033.

ANALYSIS

Allied to its favourable location – which is highly commutable to London – the West Midlands has a lower than UK average commercial property cost and a stable business survival rate of 44.4%, which makes it a great place to start a business, especially in relation to the capital. Plus, with 11 local universities and 1,188,400 people qualified to an NVQ Level 4 and above standard, there is a sustainable pool of talent.

Commuting to the capital will only get easier, journey times between Birmingham and London are expected to be just 49 minutes when HS2 opens its doors. Business owners should take into consideration that the first phase of HS2 is not scheduled for opening for several years, and this date could be pushed back further. HS2 may not influence business success in the short term, but will be a boon to business in the West Midlands in the medium to long term.

HS2 will offer new business owners opportunities; London to Birmingham will be a more comfortable commute than ever before, allowing business owners to expand to the Midlands while living in London. Alternatively, business owners may choose to migrate to Birmingham to take advantage of the lower cost of living and cheaper commercial property rents.

It should also be taken into consideration that the current appealing property prices and commercial rents could be set to rise as the demand to live and work in Birmingham and the wider region rises.

The second stage of the project will connect to Manchester, opening further business opportunities with the North.

Full details of the impact of HS2 on the region and Birmingham council’s role in maximising the benefits of the rail system for its citizens can be found on the Birmingham City Council website.

KEY SECTORS

Service businesses, in particular, could see a lot of benefits in the West Midlands, as service industries employ almost half of the region’s population in full-time work, meaning there’s a steady supply of qualified professionals.

Coventry is placed on the map by its significant and nationally recognised digital gaming hub. The town of Leamington Spa, nicknamed Silicon Spa for its digital gaming community, is home to over 2,000 people working in the industry. In total, Leamington Spa accounts for over 10% of the UK games development industry.

FUTURE

Brexit could have a negative long-term impact on the area, with the prominent automotive manufacturing industry liable to face significant damage.

Across the West Midlands more than 20,000 people are employed in the car industry; 10,000 in Solihull, 9,000 in Coventry and 8,000 in Birmingham. After Brexit, there could be huge supply chain shortages for the car industry, especially for Jaguar Land-Rover which uses 25 million separate parts per day in the production of its vehicles, while any new border tariffs could massively impact on the industry and the wider economic prosperity of the region.

Yorkshire and the Humber

KEY STATS

Business survival rate

43.9%

Active business population

230,100

Commercial property rent (per sq ft)

Leeds £30.00

Sheffield £24.00

York £20

Bradford £15

Regional average £22.25

Cost of one-bed apartment (per calendar month)

Leeds £648.36

Sheffield £586.50

York £707

Bradford £436.67

Regional average £594.63

Population estimate

5,450,130 (as of mid-2017)

Weekly pay for workers (gross per week)

£520.80

Local universities

11

NVQ Level 4 and above

1,121,400

SUMMARY

The Yorkshire and the Humber region is dominated by the medium to large cities of Sheffield, Leeds and Bradford but away from its urban centres are large swathes of rural areas, most prominently the Yorkshire Moors and the Yorkshire Dales. The cities of Sheffield and Leeds are the biggest draws for business owners in the region.

Leeds is steadily becoming a notable business centre, the city has an active business population of 33,335, sitting behind only London and Birmingham, and is instrumental to the prosperity of the region. Central to Leeds’s rise is the city’s ever-maturing Fintech hub so, for those in the sector, Leeds is a more than viable alternative to the capital.

Sheffield might be considered Yorkshire and the Humber’s second city after Leeds, but to highlight its business landscape, the emergent business scene in this northern city is looking brighter than ever – Sheffield claimed second place in our best cities to start a business guide. Sheffield’s advancements can be in no small part attributed to its successful start-up culture, stoked by national and international investment.

ANALYSIS

HS2 could play a major role in attracting business owners to the region. The high-speed rail line is set to reduce the travel time between Sheffield and London by 40 minutes, with HS2 connecting directly to Sheffield city centre via Sheffield Midland Station. Plans for the Northern Powerhouse Rail will further boost travel connections throughout the region. Links for Sheffield-Leeds-Manchester will be improved with journeys cut to less than half an hour, unlocking the opportunities in the region and boosting the local economy.

The proposed devolution of Sheffield will put more decision making power and autonomy to develop economic growth in the hands of the local authorities, and a recent breakthrough in negotiations has been announced by the Sheffield City Region.

Yorkshire and the Humber have comparably low costs of living and securing commercial property than many other UK regions, particularly the West Midlands and London. The emergence of Sheffield and Leeds as northern powerhouses added to the relatively low necessary start-up capital required, makes this an inviting location for businesses.

KEY SECTORS

Yorkshire and the Humber are known for Fintech (Leeds), manufacturing (Sheffield) and agriculture (Yorkshire Dales).

Sheffield’s manufacturing industry is well developed, with a growing aerospace manufacturing presence; in 2018, Boeing opened a production plant in Sheffield, boosting its ties to the area, joining its Advanced Manufacturing Research Centre in Rotherham.

Agriculture is central to Yorkshire’s future prosperity with the Yorkshire Dales national park being a farming hotbed, providing for the region and beyond.

FUTURE

As with all UK regions, Brexit will have wide-reaching economic implications for the people of Yorkshire and the Humber. Nearly a quarter (24%) of SMEs in Yorkshire and the Humber believe business will be “somewhat” damaged by Brexit, while 11% think their businesses will be “significantly” affected, according to Telegraph research powered by YouGov.

Scotland

KEY STATS

Business survival rate

43.7%

Active business population

181,595

Commercial property rent (per sq ft)

Glasgow £31

Edinburgh £32.50

Regional average £31.75

Cost of one-bed apartment (per calendar month)

Glasgow £634.36

Edinburgh £766.74

Dundee £516.55

Aberdeen £599.74

Regional average £629.34

Population estimate

5,424,800 (as of mid-2017)

Weekly pay for workers (gross per week)

£563.20

Local universities

14

NVQ Level 4 and above

1,515,900

SUMMARY

The only country in this ranking, Scotland, the most northern region in the UK, naturally has a more diverse economy and sector breakdown than other UK regions due to its scale.

Scotland’s population, however, of 5,424,800, is lower than several UK regions including London and the West Midlands. For UK businesses, it might be worth putting the slight differences between England and Scotland under the microscope; from business regulations to business landscape, before committing to starting a business in Scotland. This will help explore whether this will impact a company’s ability to thrive in the region.

Scotland relies on various differentiated sectors for a strong economic outlook, with agriculture, tourism, oil and gas extraction in the North Sea, and financial services being its most significant contributors.

ANALYSIS

Edinburgh, Scotland's historic capital city, is a huge tourist attraction, but also a magnet for entrepreneurs, despite its relatively high cost of living and business operation. Edinburgh is popular for its huge access to a talented workforce; having more citizens qualified to an NVQ Level 4 and above than all UK regions, bar London. Plus, cultural Edinburgh has a huge amount to see and do; perhaps this is why it is so attractive to restless entrepreneurs.

The University of Edinburgh Innovations is an incubation centre supporting a number of growing science and tech UK start-ups, fostering the growth of Scotland’s start-up sector.

Edinburgh also has one of the UK’s top science parks and research centres, making Scotland a notable option for successful science start-ups.

Scotland has more to offer than Edinburgh alone – with many places to start a business – similarly to how the UK isn’t defined by London. On this note, Glasgow, Scotland’s second city is leading the way in smart, interconnected data. Glasgow has developed as a vibrant and attractive destination for business while enjoying reduced crime rates, all thanks to a £24 million investment from the UK government to become the focal point of its future city demonstrator programme.

Future City Glasgow aims to make the city ‘a better place to live, work and play’. Glasgow City Council has led the work on this ambitious project. Perhaps the success of this initiative is proved by the fact that Glasgow has a marginally higher active business population than Edinburgh.

Scotland’s Fintech sector has a stated aim to be a top five global hub, so those in the industry should pay close attention to the developments in the country. Now might be the best time to base your operation in Scotland, to enjoy the benefits of the boom.

KEY SECTORS

Asset management is one of the most significant sectors in Scotland. Surprisingly, six out of 10 of the world-leading asset management firms have a base in Scotland (Standard Life, Prudential, BlackRock, for example). It might be easy to think that Scotland is, therefore, the best start-up location for a new asset management company; however, the competition may be limiting to growth.

The majority of the UK’s oil and gas extraction industry is located in Scotland, and offshore oil and gas extraction is responsible for approximately 90% of Scotland’s energy. Some £250 million funding was pledged to the oil and gas industry by the UK and Scottish governments through the Aberdeen City Region Deal, so the oil and gas industry in Scotland is only set to grow in the short term.

FUTURE

Scotland’s independence debate could cause more uncertainty over the next few years, a second sovereignty referendum is eminently possible in the next decade, and the impact of this on commerce could have long standing consequences.

East Midlands

KEY STATS

Business survival rate

44.9%

Active business population

190,090

Commercial property rent (per sq ft)

Nottingham £14.50

Leicester £17

Derby £18

Northampton £16.50

Regional average £16.62

Cost of one-bed apartment (per calendar month)

Nottingham £583.33

Leicester £581.67

Derby £494.44

Northampton £568.75

Regional average £557.04

Population estimate

4,771,666 (as of mid-2017)

Weekly pay for workers (gross per week)

£515.90

Local universities

9

NVQ Level 4 and above

974,400

SUMMARY

This diverse and centrally-located region is favourably positioned for business, with road networks connecting the area directly to London via the M1 motorway. The East Midlands spans the North-South divide, with Nottingham being East Midlands most northern city while Northampton is the region’s most southerly conurbation.

On a surface level, the area is typical in many ways, with a varied mix of industries spread throughout. The most prominent cities in the East Midlands are Derby, Leicester and Nottingham. The central location of the East Midlands opens up easy access to the nearby West Midlands, London and the South East as well as the major Northern cities. Further appeal for the region includes the lower cost of living and renting business premises which means operating costs can be significantly less than the West Midlands and London.

With nine local universities and almost one million East Midlanders qualified to NVQ Level 4 and above, there is a sustainable talent base to kick-start new companies, and the relatively high business survival rate of the region means UK start-ups have a higher chance of surviving the initial tough years before thriving.

ANALYSIS

The East Midlands has benefited from major infrastructure developments including investment in the M1 motorway and improvements to the Nottingham tram system. The East Midlands airport is commercially important, as it’s the second busiest airport for freight in the UK following London’s Heathrow.

The planned Oxford-Cambridge expressway could launch further business opportunities for the East Midlands, thanks to a project managed by Highways England. Although just south of the region, the planned expressway and the potential development of the Cambridge-Milton Keynes-Oxford Corridor could ensure the area becomes a national technology hub, thanks to plans by the National Infrastructure Commission.

KEY SECTORS

Leicester has a significant advanced manufacturing cluster with a number of organisations in the space technology sector. Space Park Leicester is a research, innovation and skills community for the space industry funded by the University of Leicester. This programme will assist the growth of these businesses, increasing the interest in the East Midlands for space technology start ups.

Nottingham has a flourishing life sciences and tech development sector in the creative quarter of the city which provides new-business incentives, including grants and funding programmes for the growing industries. For those looking for funding in the region, business loans and start-up business loans range from £500 to £25,000.

FUTURE

More than half of exported goods from the manufacturing sector in the East Midlands have been bound for the European Union. This reliance on Europe could lead to huge uncertainty and financial pressure in the wake of Brexit.

South West

KEY STATS

Business survival rate

45.8%

Active business population

239,150

Commercial property rent (per sq ft)

Bristol £32

Plymouth £17

Exeter £20

Regional average £23

Cost of one-bed apartment (per calendar month)

Bristol £860.71

Plymouth £546.07

Exeter £679.57

Bath £850.17

Gloucester £541.67

Regional average £695.63

Population estimate

5,559,316 (as of mid-2017)

Weekly pay for workers (gross per week)

£531.20

Local universities

12

NVQ Level 4 and above

1,282,100

SUMMARY

The South West is a largely rural region, with many areas – particularly Devon and Cornwall – remote from the rest of the UK. The area ranges from Gloucestershire in the North West to Cornwall in the far South West. The South West has an active business population of 239,150, with around 20% of this figure coming from Bristol.

There are plenty of local universities to bolster this workforce and more than one million locals qualified to NVQ Level 4 and above, so there are many places to start a business in the South West.

ANALYSIS

Lower commercial property rent – £23 per sq ft per month – compared to some more glamorous regions of the UK, alongside affordable costs of living (average rent for a one-bedroom flat is just £695.63 per calendar month) make the South West an attractive business location for new UK startups. This fact should be balanced with the relative distance of the South West from other regions. However, Bristol in the north east of the region is relatively well connected to the wider South West and other UK regions; rail journeys to London take a little over two hours and the road networks make other regions fully accessible.

Many citizens in the South West believe the local government bodies and business support networks are overly complex. The South West has six local enterprise partnerships – a scheme to foster growth and job creation in local areas – which can lead to a convoluted decision-making process. To compound this, the Bristol area has three mayors; this has the potential to confuse economic planning. Bristol.gov outlines the city’s three types of mayor. This resource also is a source of SME advice for businesses looking to move into the Bristol area.

Bristol is probably the most attractive city for individuals looking to migrate to find start-up success, with its rich cultural history and growing creative industries.

Bristol was identified as one of the UK’s leading ‘smart cities’ in research published by Huawei in 2017. Huawei’s UK Smart Cities Index measured how well urban areas use technology to improve everyday life. Bristol was recognised for the ‘Bristol is Open’ project which developed a city-wide innovation network, pioneering open data, clean energy and fostering community programmes.

KEY SECTORS

Tourism is an important factor to the success of the South West, so those in this admittedly competitive sector could find success in the region. Cornwall is admired for its stunning beaches and coastal scenery, Newquay is a haven for watersports enthusiasts, the Cotswolds is popular with UK holidaymakers, while Dartmoor National Park is an historic moorland.

Agricultural practices are central to the commercial landscape of the South West, with a quarter of the UK’s agricultural holdings located in the South West, according to the NFU. Almost three-quarters of the region is solely used for agriculture (1.8 million hectares), with the industry employing over 61,000 people. Additionally, the South West’s agricultural activities contribute twice as much to the UK’s GDP than any other region, and it creates twice as many jobs than any other region.

In recent years, social enterprises have received a shot in the arm across the region, particularly in Plymouth. During the industrial revolution the seaside city relied on commercial shipping. Now feeling the decline of industry, Plymouth has invested in local social enterprises and after a period of rapid growth, it now has over 150 social enterprises, employing more than 7,000 people with a combined income in excess of £500 million.

FUTURE

The aerospace industry located in the South West could be impacted if Airbus were to leave the area over Brexit, but any potential relocation could be an opportunity to seize for a new player in the industry. With established supplier networks and infrastructure in the South West, Airbus leaving the region could be a major boon to growing aerospace organisations.

On the hunt for business opportunity

We’ve created this guide to draw attention to the diversity of business opportunities in the UK; contrary to belief, it’s not all in the major cities. Tenacious businesses in a suitable location can survive the initial years of operation and thrive long term.

This guide is one of our insights created for the UK’s business community. We hope to highlight UK start-ups’ success stories and offer clear and transparent information that will help other businesses out there to make fully informed decisions on the next stage of their growth.

Third-party data provided is based on information that is publicly available at the time of writing. NerdWallet does not accept, for any reason, responsibility for the content on third-party sites.

For an update on the best locations for your start-up enterprise, please read our 2021 guide to the Best cities to start a business in the UK.

Image source: Getty Images

About the author:

Finance Director at NerdWallet UK and business adviser to SME's Nic is spokesperson for small and growing businesses with a strong understanding of the financial needs of business Read more

If you have any feedback on this article please contact us at [email protected]