The UK’s entrepreneurial divide: why is the south more enterprising than the north?
On Wednesday the annual edition of the Business Population Estimates for 2012 will be published by the Office for National Statistics. It’s a publication that attracts far less attention than the regular inflation, employment and growth reports but it deserves more for it will almost certainly present a worrying picture of an emerging ‘entrepreneurial divide’ between the north and the south.
The last two editions of the report for 2010 and 2011 show a country where the number of businesses has been rising inexorably since 2000 from 3.5 million to 4.5 million – a rise of over 30%. Even the most severe financial and economic crisis since the 1930s has not dented the appetite for start-ups.
But this hides the reality of a divided nation. While southern regions boasted 1,126 enterprises per 10,000 people in 2011, northern regions (including Scotland and Northern Ireland) could muster only 773.
More worryingly, the recent acceleration in the establishment of start-ups is happening far faster in the south than the north with a 6% and 2.5% rise respectively in the number of enterprises per 10,000 people between 2010 and 2011. Wales and Northern Ireland actually saw a 5% fall.
The sheer scale of the entrepreneurial divide is shocking. The most entrepreneurial region (London) had 1,231 enterprises per 10,000 people in 2011. The least entrepreneurial (the North East) had very nearly 50% less at 625.
Why this divide is so stark urgently needs further investigation. As Ben Dellot points out in his blog post today:
where once we were a nation of shopkeepers, now we are seemingly one of consultants, freelancers, entrepreneurs, online marketplace traders.
This is the reality of the new economy that is being created in the UK and those regions that fail to nurture the intense entrepreneurial spirit required to adapt to this challenging world will inevitably be left behind.
Undoubtedly there is a strong element of Catch 22 about all this: regions that have more active labour markets and more enterprises are inevitably more likely to generate further entrepreneurial activity. The regions with more businesses and start-ups do, for example, have higher employment rates and lower unemployment rates (although London, interestingly, bucks this trend).
But to simply accept this as a sad fact of life is to condemn northern regions to their fate in an economy where entrepreneurial oomph increasingly counts. Instead, we desperately need to understand more about the motivations and needs of the new wave of business people and then explore how those motivations can be nurtured and those needs supported in the regions where the entrepreneurial fire merely flickers rather than roars.
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