Business development · 14 March 2018

New business creation in Scotland falls to under a fifth of UK average

New business creation
Aberdeen was the worst performing major UK city for new business creation

Scotland is home to all five of the worst performing UK areas for new business creation, new research has found.

Analysis by UHY Hacker Young showed the net number of new companies founded in Scotland in 2016 per 10,000 people dropped to 2.4. That’s under a fifth of the UK average of 13.2 new businesses founded per 10,000.

While government initiatives like the Northern Powerhouse and the Midlands Engine have seen finance opportunities pumped into English regions, with London’s so-called “Silicon Roundabout” synonymous with startup activity, UHY warned that both Westminster and the devolved Scottish government had failed to motivate entrepreneurs.

Commenting on the data, Jon Warsop, group director at UHY, said the decline in new business creation in Scotland should serve as a “wake-up call” to politicians from both sides of the border.

“While the government’s eyes have been focused elsewhere, they have let Scottish businesses lag far behind,” he said.

Oil effect

Falkirk and Fife were among the large towns suffering from a shortage of entrepreneurship, with net new business creation falling to -33.9 and -49.1 respectively.

However, the performance of Aberdeen was possibly most significant. With almost 18 more businesses closing than opening per 10,000 people, the North Sea oil hub was ranked as the worst performing major UK city.

UHY pointed towards a downturn in the oil sector for Aberdeen’s low business creation, with the city feeling the effects of a major US shale gas boom “worse than anywhere else”.

At over $100 a barrel in mid-2014, a twelve-year of under $30 in early 2016 saw oil companies undertake significant cost-cutting measures.

A recent report from Scotland’s national skills agency suggested as many as 5,500 jobs could be lost from Aberdeen’s gas and oil industry over the next decade.

Warsop added: “Oil has historically been a driving force in Scotland, but the government now needs to be more proactive in business and job creation.”

Rank

Location

Net number of new businesses created per 10,000 population

362 out of 362 Clackmannanshire -537.5
361 Na h-Eileanan Siar -133.8
360 Fife -49.1
359 Falkirk -33.9
358 Aberdeen City -17.8
Scotland average 2.4
UK average 13.2

__________________________________________________________________________________
London

 

This London borough has been crowned the best place for UK entrepreneurs

Despite its popularity with startups, the number of entrepreneurs choosing to set up shop in Islington’s Silicon Roundabout has been shown to have fallen.

__________________________________________________________________________________

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

ABOUT THE EXPERT

Simon Caldwell is deputy editor at Business Advice. He has a BA in politics and communications from the University of Liverpool, and has previously worked as a content editor in local government and the ecommerce industry.

Q&A

If you’ve found the article above useful, but have a more detailed and bespoke question, then please feel free to submit a query to our expert. We at Business Advice will get in contact with them on your behalf and arrange for a personalised response. These questions and answers will then be collated on the site for any other readers who have similar queries.

Ask a question

HR