Nations and Regions Outpace London for High Growth Firms

Number of high growth firms in the UK – seen as indicator of economic health – reaches nearly 12,000, highest level since the dotcom boom.

According to new research the number of companies achieving high growth in the nations and regions of the UK is rising more than twice as fast as in London.

Analysis by the Enterprise Research Centre (ERC), the UK’s leading independent institute for research into small and medium size businesses, shows that the number of ‘high-growth firms’ (HGFs) across the UK has risen to 11,855 – the largest number since the dotcom boom of the early 2000s.

According to the OECD’s definition, a HGF is a firm that has at least 10 employees and records an annual average growth of 20% in employment over three years. In 2012-15, HGFs accounted for 7.5% of all firms of this size in the UK.

HGFs are regarded as important ‘bellwethers’ of economic vitality because, despite accounting for a small proportion of all firms, they generate a disproportionately large share of the increase in jobs. ERC research has shown that HGFs create around a third of the increase in private sector jobs in the three-year periods over which they are measured.

Unsurprisingly, London continues to have the largest number of HGFs both in absolute terms and as a proportion of its population of 10+ employee-businesses (2,430 in 2012/15 or 9.5% of all firms of 10+ employees in the capital) but a striking trend since the recession of 2008/9 has been the rapid increase in HGF numbers in areas outside London.

In particular, Scotland increased its number of HGFs by 35% over the same period, from 534 to 722 which to me reflects the increasing focus on ambitious companies in Scotland that are now scaling up.  Indeed, as Irene Graham, CEO of the Scale-Up Institute and new Visiting Professor at the Hunter Centre for Entrepreneurship at Strathclyde Business School which was recently awarded the prestigious Gold Small Business Charter Award (one of only 5 in the UK and the only one in Scotland) said:

“Scaling businesses are vital to our local economies, driving jobs, productivity and opportunity. Supporting these high growth firms in their expansion is crucial. Our large corporates, financiers, universities, local authorities, advisors, and LEPs all have critical roles to play in leaning in to support scaling firms.  We have a tremendous opportunity. Let's make sure we are developing the skills, fostering the talent, and creating the international connections to enable the UK’s high growth firms to realise their fullest potential.”

Strathclyde is now recruiting for a Masters in Entrepreneurship, Innovation and Technology – a pioneering programme in collaboration with the University of Waterloo, in Canada which will offer practical skills development in key entrepreneurial areas including design, big data analytics and sales.  Together with our acclaimed Growth Advantage Programme, our Sales Masterclasses and Workshops for Scottish Enterprise, Highlands and Island Enterprise and Scottish EDGE and our wide support for Family Businesses, Strathclyde Business School will continue to build on our leadership position in support of Scotland's scale up companies.

Note: ERC is the UK’s leading independent research institute on the drivers behind the growth and productivity of small and medium-sized enterprises (SMEs) and is a partnership between five Business Schools at the Universities of Warwick, Aston, Imperial College, Strathclyde and Birmingham.