The popular impression of a north-south divide has been called into question, after the north-east overtook London in the annual Barclays Business Regional Impact Index.
The Index, which was compiled from a study of 1000 business owners across the UK, reveals which regions benefit most from the contributions of their small businesses – based on 13 indicators, including job creation, expected profit and outlook on growth.
The north-east, which last year experienced slower growth than the south-west, London and Wales, surprised analysts at Kingston University’s Small Business Research Centre, when it moved up three places – replacing the Capital in the top spot.
By contrast, the south-east fell to the bottom of the table – a year-on-year drop of six places – potentially driven by the region’s reliance on the service industry.
The rise of the north-east
Analysts believe the north-east’s rise to the lead position was driven by strong investment in innovation, proportionate turnover and the establishment of global businesses in the region.
Yorkshire and Humberside also experienced an impressive rise, from the tail end of 2010’s table (seventh) to fourth position this year. Central England rose from nineth to fifth position.
Furthermore, forecast job creation was at the highest in the north-east at 21%, followed by the east of England at 19% and the south west at 25%. The remaining 65% of nationwide small businesses had no plans to recruit in 2012.
Business optimism
However, the overall outlook of business owners was one of tentative optimism. Around half hoped to grow their business in 2012 and the same proportion expected an increase in profits.
Businesses in London (57%), central England (54%) and the north-east (54%) were most positive about growth next year – while firms in the south-west (42%) and south-east (40%) were the least optimistic.
Innovation investment
Additionally, many respondents said they were looking to innovation to boost growth in 2012 – with more than a third believing this will be a key driver of new business. Similarly, 25% plan to do more with less next year.
Steve Cooper, managing director of Barclays Business & Personal Banking Solutions believes this is crucial: “Innovation is a great way to drive growth in a business, potentially exposing small businesses to new markets both at home and abroad.”
Commenting on the breakdown of the traditional ‘north-south divide’ Professor Robert Blackburn, who developed the Index at Kingston University, added:
“The north-east’s…position at the top of the table could be down to entrepreneurs in this region having a long-standing propensity to innovate and export beyond their limited regional market, in contrast to those enjoying close proximity to larger metropolitan markets.
“The north-east, London and south-west are proving to be the most resilient in today’s tough economic climate.”
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