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Small businesses in northern England set to suffer most from coalition cuts Small businesses in northern England set to suffer most from coalition cuts
(2 months later)
Politicians should take urgent action to stop small businesses falling victim to Whitehall spending cuts, with towns and cities in northern England among the areas likely to be worst hit, according to a report from thinktank the Centre for Cities.Politicians should take urgent action to stop small businesses falling victim to Whitehall spending cuts, with towns and cities in northern England among the areas likely to be worst hit, according to a report from thinktank the Centre for Cities.
Blackburn, Hull and Liverpool are among the places where small firms will be particularly vulnerable because they are heavily dependent on local demand, and welfare cuts will hit the population particularly hard, according to the 80-page study.Blackburn, Hull and Liverpool are among the places where small firms will be particularly vulnerable because they are heavily dependent on local demand, and welfare cuts will hit the population particularly hard, according to the 80-page study.
Using the same analysis, Cambridge, with its cluster of hi-tech firms, along with Crawley and Reading, are identified as places where local small businesses will be hurt less.Using the same analysis, Cambridge, with its cluster of hi-tech firms, along with Crawley and Reading, are identified as places where local small businesses will be hurt less.
Alexandra Jones, chief executive of Centre for Cities, said: "Small and medium-sized businesses are the lifeblood of the UK's economy but many have been particularly affected by the impact of the recession on their local economies.Alexandra Jones, chief executive of Centre for Cities, said: "Small and medium-sized businesses are the lifeblood of the UK's economy but many have been particularly affected by the impact of the recession on their local economies.
"They will face challenges ahead as further austerity measures have a knock-on effect on local demand for their services.""They will face challenges ahead as further austerity measures have a knock-on effect on local demand for their services."
The report from the Ernst & Young Item Club, a respected forecasting body, said the UK's recovery had "finally got legs". It almost doubled its forecast for growth this year to 1.1%, up from 0.6% just three months ago.The report from the Ernst & Young Item Club, a respected forecasting body, said the UK's recovery had "finally got legs". It almost doubled its forecast for growth this year to 1.1%, up from 0.6% just three months ago.
However, the Centre for Cities study, sponsored by the insurer Zurich, warns that some parts of the UK will miss out in any recovery.However, the Centre for Cities study, sponsored by the insurer Zurich, warns that some parts of the UK will miss out in any recovery.
It is calling on the government to devolve extra powers to local enterprise partnerships – the key bodies involved in delivering regeneration since the coalition abolished the regional development agencies – to allow them to tailor business support to their local economy.It is calling on the government to devolve extra powers to local enterprise partnerships – the key bodies involved in delivering regeneration since the coalition abolished the regional development agencies – to allow them to tailor business support to their local economy.
It also argues that the Department for Business should simplify its complex array of business support schemes; and it calls for UK Trade and Investment, the government body charged with boosting Britain's export performance, to focus on helping smaller firms to develop new markets outside their local area.It also argues that the Department for Business should simplify its complex array of business support schemes; and it calls for UK Trade and Investment, the government body charged with boosting Britain's export performance, to focus on helping smaller firms to develop new markets outside their local area.
Small and medium-sized enterprises (SMEs) – those with fewer than 250 employees – make up 99% of firms in Britain's cities, and employ almost half of the workforce.Small and medium-sized enterprises (SMEs) – those with fewer than 250 employees – make up 99% of firms in Britain's cities, and employ almost half of the workforce.
But the data in the report reveal wide variations in how successful different cities have been at nurturing new and growing firms.But the data in the report reveal wide variations in how successful different cities have been at nurturing new and growing firms.
London, Aberdeen, with its thriving oil services industry, and Reading, in the hi-tech M4 corridor, are the three cities with the most new start-up businesses relative to their population – 72.5 per 10,000 in the case of the capital.London, Aberdeen, with its thriving oil services industry, and Reading, in the hi-tech M4 corridor, are the three cities with the most new start-up businesses relative to their population – 72.5 per 10,000 in the case of the capital.
At the other end of the scale, just 20.7 new firms were created for every 10,000 people in Sunderland, and only a slightly higher number in Belfast, Dundee and Mansfield.At the other end of the scale, just 20.7 new firms were created for every 10,000 people in Sunderland, and only a slightly higher number in Belfast, Dundee and Mansfield.
The thinktank identifies a series of factors that tend to help cities to develop healthier small business sectors.The thinktank identifies a series of factors that tend to help cities to develop healthier small business sectors.
Fast-growing cities, with rising populations, such as Milton Keynes and Peterborough, offer expanding markets. A well-educated workforce helps too.Fast-growing cities, with rising populations, such as Milton Keynes and Peterborough, offer expanding markets. A well-educated workforce helps too.
Richard Coleman, director of SMEs for Zurich, said: "It is important that both local government and local business groups not only assess their current small business base and its comparative strengths, but also understand and plan for the changing shape and challenges of the SME sector on the horizon."Richard Coleman, director of SMEs for Zurich, said: "It is important that both local government and local business groups not only assess their current small business base and its comparative strengths, but also understand and plan for the changing shape and challenges of the SME sector on the horizon."
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