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North vs. South: Honours even as Newcastle and Brighton lead SME growth

The latest figures show that Newcastle and Brighton have both seen a 24% rise in microbusinesses over the past year.

If you were to ask anyone to list features that link Brighton and Newcastle, you'd probably be told they're both in England. That's about it.

However, new research published by shows that there's a far more impressive connection between the two cities - they've both seen a 24% increase in new microbusinesses over the past 12 months, making them joint-top of the UK table for SME startup rates.

To put this in context, a record 490,000 new businesses reportedly launched last year, with Brighton and Newcastle leading the charge. Has the historic north-south divide been bridged, and why are two cities at opposite ends of the country revelling in fresh SME activity?

Cross country

One of the first things to note here is that second place in the startup league is also shared by two locations that are hundreds of miles apart - namely Manchester and Southampton, with each enjoying a 23% leap in new firms.

And considering that Belfast, London and Cardiff ranked joint-third with 21%, the most promising thing about the figures is that they represent a surge in entrepreneurial action throughout the UK.

Brighton's chamber of commerce markets itself as a source of business support, helping to foster relationships between small firms and provide them with advice on maximising publicity

According to Bill Little, European director at, the reason for this is that "starting a microbusiness is easier than ever", and more people are doing so to offset the fall in real wages.

Yet despite the promising signs, the number of new SMEs that have failed means the UK has only seen an annual net growth rate of 0.7% over the past five years - a factor which indicates more needs to be done to support firms that are in their infancy.

Local support

Perhaps this is where Newcastle and Brighton are both excelling. Each of the cities has its own chamber of commerce dedicated to facilitating the growth of small businesses, and if the framework is there then the likelihood is that more people will take advantage of it.

While many locations throughout the UK have similar bodies, the vital factor is the extent to which they serve to provide a base for SMEs to get off the ground. This is something the two cities at the top of the table seem to have got down to a tee.

Brighton's chamber markets itself as a source of business support, helping to foster relationships between small firms and provide them with advice on maximising publicity. It also runs bite-sized training sessions for entrepreneurs who are looking for guidance in various areas.

Newcastle's SMEs have a similar advantage because they benefit from the North East Chamber of Commerce and the Newcastle Chamber of Commerce, both of which hold events aimed at local businesses. While their effect is difficult to quantify, it's fair to assume that bodies such as these are vital in giving more people confidence to start their own company.

The bigger picture

In spite of the surge in new SMEs we've witnessed in the past year, there is still a long way to go. The UK continues to languish behind many of its international counterparts, with 12 European countries seeing a higher net growth rate in the creation of smaller firms last year.

The Federation of Small Businesses believes that one of the key issues is high-street banks failing to provide entrepreneurs with access to the necessary finance, arguing that more competition is needed to properly stimulate the market and help keep SMEs afloat.

With the main problem being that smaller companies can't access the money they need to build and expand, it's essential that businesses keep a tight control of their costs and save money wherever they can. This helps give them the best possible opportunity to thrive.

Image credit: Clive Darra