Yorkshire's small firms show better productivity gains

Northern SMEs are outpacing much of the South on productivity gains, research has claimed.

Hull was cited as an area to watch

The UK Local Growth Dashboard 2018, published by the Enterprise Research Centre, shows that firms in Yorkshire, the North West and North East showing above-average rises in their productivity, defined as turnover growing faster than employment.

Both Greater Manchester and Leeds are in the top 10 regions for productivity growth, with 9.2 per cent and 9.1 per cent of firms respectively becoming more productive over the 2014-2017 period.

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This was ahead of London, where 9 per cent of firms achieved this.

The North’s start-up rate is on average lower than that in the Midlands and South, but many Northern areas appear to be creating the right environment for growth.

Start-ups scaling to £1m plus turnover within three years are well-represented in Greater Manchester, Cheshire and Warrington and Humberside – all above the UK average of 1.9 per cent.

Professor Mark Hart, Deputy Director of the ERC, said: “Our findings show a complex geography which challenges some of the preconceptions about the ‘hotspots’ of business growth across the UK.

“What’s clear is that there are pockets of SME dynamism right across the country and it’s not as simplistic as either a North-South or urban-rural split. That being said, it’s also true that firms in some parts of the country face more of a struggle to scale up and grow their productivity.

“The challenge now for policymakers is to learn the lessons of what’s working at local level so that we spread best practice right across the country.

“This is especially important as the UK prepares for Brexit to help mitigate any shock to local economies.”

The report also found that start-up rates are highest in London and the wider South of England, with hotspots in the Midlands and North. Wales, Scotland and Northern Ireland show much lower start-up rates than England.

Coastal and rural parts of England in general showed lower rates of business growth.