• Barclays’ SME Growth Factors Index measures the strength of 12 key ‘growth factors’ essential to business productivity 
• Edinburgh benefits from strong growth factors such as good quality of life, a qualified workforce, strong productivity and positive net immigration
• Scotland’s capital does not fare as well when it comes to broadband speed and road infrastructure

Edinburgh is one of the best cities in the UK in which to start a business, according to Barclays’ SME Growth Factors Index¹, with some of the best growth environments for small businesses to grow and flourish. Scotland’s capital city ranked fourth in the index behind Bradford, Leicester and Coventry.

The Index, created by Barclays Business Banking, reflects the strength of 12 key growth factors² such as business rate relief, infrastructure, broadband speed and labour productivity, which are essential to boosting business productivity and growth. Analysing the 20 largest cities by population size across the UK³, the index ranks each city based on the strength of each factor.

The cities with the top growth environments for UK start-ups are:

1. Bradford
2. Leicester
3. Coventry
4. Edinburgh
5. Liverpool

Bradford, Leicester, Coventry and Edinburgh – the best growth environments for businesses

Edinburgh was ranked fourth overall, reflecting high rankings for quality of life (the top ranking), qualified workforce (the top ranking), labour productivity (second only to London) and net immigration (second only to Coventry).

Bradford was ranked highest overall, with the best business rate relief, road infrastructure, number of job vacancies, cost of commercial rent, and business survival rate⁴. Leicester featured in second place thanks to its strong business survival rate, distance travelled to work and level of business rate relief. Coventry came in third place, with the highest net migration into the city.

Infrastructure

Edinburgh’s overall ranking was affected by factors including broadband speed, ranking 16^th out of 20, and road infrastructure, ranking 12^th.

Highest concentration of start-ups is currently in London, Birmingham and Leeds

Additional Barclays analysis⁵ reveals London, Birmingham and Leeds – areas with the highest populations – have seen the highest number of business start-ups over the last six years. In the capital, almost 577,000 start-up businesses have launched since 2012, while Birmingham has seen 45,000 new businesses, and there have been 26,400 in Leeds. Edinburgh ranked at the middle of the table with just over 18,000.

Yet when it comes to the strength of the growth factors in these cities, the results are less positive. London gives out some of the smallest amounts of business rate relief and has the highest commercial rent costs, appearing 12^th on the overall list of 20 cities. Similarly, Birmingham features in 11^th place, let down by its road infrastructure and poor quality of life, while Leeds ranks in 18^th place, also as a result of its poor road infrastructure.

In comparison, just 16,800 of businesses have started in Bradford since 2012, 13,200 in Coventry, and 15,300 in Leicester – yet they have the strongest growth factors which are key to business productivity and growth.

Stuart Brown, Head of SME Scotland at Barclays Business Banking, commented: “It’s really encouraging to see that so many areas offering growth potential are outside of London and the South East, particularly with Edinburgh ranking in the top five cities across the UK.

“We undertook this study because we support small companies right across the country, and are keen to help more people start and grow businesses wherever opportunities exist. We’re committed to investing in Scotland’s SMEs and entrepreneurs, evidenced through the launch of our dedicated Scottish £500m SME fund and recent partnership announcement with CodeBase which will see us provide facilities and on-site support for businesses to grow.

“Entrepreneurs do need to consider the market for their particular company, but an environment that supports growth can make a real difference. The growth factors identified by the research can become even more valuable when small companies start looking to scale up and grow, which is something we particularly encourage.”