Top 25 UK cities to start a business in 2022

Our expert researchers have examined over 40 crucial factors that can influence startup success. So where is the best UK city to start a business this year?

Our experts

We are a team of writers, experimenters and researchers providing you with the best advice with zero bias or partiality. This article was authored by:
  • The Startups Team

Startups.co.uk is proud to unveil our latest Startups Cities Index, an annual ranking of the top cities in the UK – outside of London – for starting a business.

The most exhaustive research project of its kind, the index looks at a grand total of 42 research categories covering everything from digital infrastructure to high street funding, and with this information determines the best overall city for startups to thrive in.

Last year, a record number of new businesses were registered on Companies House. In fact, nearly 80 new businesses were started every hour in the first half of the year.

So where are the top UK cities, outside of London, that are empowering new business success?

This year, Sheffield has been revealed as our ultimate winner, thanks to the city’s strong performance across many of our research areas. The industrial powerhouse impressed us with its low cost of living, large working population and fantastic transport links.

But there are plenty of other cities that are also helping to nurture new business talent in exciting ways.

Our expert team analysed key data across five major categories:

  • Business support
  • Infrastructure
  • Talent
  • Wellbeing
  • Business activity

Read on to see the winners of each category, and find out how well your city performed.

Top 25 cities to start a business in 2022 overall

Overall, our top UK city for starting a business is Sheffield.

England’s steel city impressed us in multiple categories, but it deserves special praise for making the top 10 in four out of our five main research categories, including second for business support and third for talent.

Sheffield City Region boasts an impressive business profile and is home to world-class brands, including Boeing and HSBC.

The city is also famous for its Innovation District. This globally significant centre for innovation and translational research spans over 20,000 acres and is a major driver of growth in the north of England and across the UK.

As a university city, Sheffield is home to thousands of highly skilled workers and graduates, creating a huge pool of talent for recruiters to pick from.

It is also nestled in the Peak District National Park, creating a beautiful, green location to attract employees.

Harry Bliss is co-founder and CEO of Startups-100 business, Champion Health. Bliss told us that without Sheffield’s business support and talent pool, Champion Health would not exist.

“It’s here that I first founded the business, sought investment and – of course – gained investment from a fantastic local tech-for-good incubator named TwinklHive.

“There’s [also] a strong tech scene – no doubt helped by excellent local universities and courses. And with many professionals being priced out of cities like London, I think Sheffield is becoming a more attractive proposition for young talent.”

Our second-place city is Glasgow, thanks to an outstanding overall score. Known for its industrial prowess, creativity and unique charm, this city has a lot to be proud of.

The host of COP26 came top of the list for infrastructure, and also ranked highly for cost of living.

Liverpool, Leeds and Bristol make up the rest of the top five. These three student cities both achieved high marks for talent, with a combined total of over 94,000 students in higher education between them.

Yvonne Asquith – Business Growth Manager at Business Sheffield: “Sheffield is a great place to start a business because it's big enough to feel like there's opportunity, but small enough to feel that you can make a difference.

“We have a strong business community with a genuine appreciation of local independents, a tech sector positioned for great collaboration and a rich manufacturing base. Helping is what we do at Business Sheffield. We’re here to give people the confidence to take the first step.”

Cities in England, Scotland and Wales all topped the board, with a range of regions represented across the whole of the UK.

Edinburgh put in a particularly good show – the Scottish capital won the talent category by an impressive margin. More than six in 10 of its workers are highly skilled, the highest number out of all 25 cities.

As for Wales, Cardiff came in at number six. Alongside Swansea, it came out strong in Business Support. On average, we found that both cities charge less than £16 per sq ft for average commercial rent, making them two of the cheapest locations for business premises.

Northern Ireland, meanwhile, was also well represented, as Belfast ranked number one for cost of living. This is highly significant given the current inflation crisis that, as we reported earlier this year, is the top concern for 71% of UK SMEs.

Belfast has the second-lowest average property cost at £145,337, as well as the cheapest average weekly cost of childcare at £187.

Best City for Support: Birmingham

Startups Cities 2022 - Support

Our research found that Birmingham is the highest-performing city for business support.

When starting a new business, you need a lot of support to get up and running. Councils can play a key role in assisting startups by surveying their needs to provide supportive local networks.

Local authorities also often work with chambers of trade and other influential partners to provide financial backing or premises, which makes their support a crucial resource for entrepreneurs.

Unsurprisingly Birmingham, as the second-largest city in the UK, offers the highest number of commercial premises (44,757). This is an increase of over 16,000 compared to third-place Leeds.

Sheffield came in second for support. It also placed just below Swansea in average commercial rent, with a cost of £13.05.

Sanjay Aggarwal is co-founder of artisanal business Spice Kitchen. A kitchen table start-up, the company is now sending handmade spice blends around the world.

Aggarwal told Startups: “What makes Birmingham exciting is the influx of investment that has been specifically targeted at helping small (and medium) sized businesses get off the ground in the area.

“There is so much support available, and it’s really worth exploring this if initial funding is a barrier to you getting started. Spice Kitchen is thriving. I would put much of that down to our original Birmingham roots!”

Smaller cities perform poorly for business support

Smaller cities, such as Cambridge, York and Oxford, performed poorly in terms of commercial rent – all three ranked in the bottom five for average rent cost.

In fact, Oxford’s average rent cost of £41.02 per sq ft is more than three times as much as that of first-place Swansea. This is likely because smaller cities with limited available premises have more demand for space, which sends costs skyrocketing for startups.

Northern Ireland is best for business rates

Another crucial aspect of business support comes in the form of business rates. While these are rates that you’ll have to pay, the money is often used by local councils to provide funding and support to entrepreneurs – which means that the cheapest cities aren’t always the best.

We examined business rate estimates for all of the top 25 cities to find the median, which came out to £2,536 per city.

Belfast came the closest to this amount with an average annual rate of £2,426. It’s our top UK city for business rates, as here you’ll strike a good balance between the money you’ll pay and the support you’ll get.

The city with the lowest average business rate is Manchester at £400 per organisation. The most expensive city is Coventry – organisations near the so-called Motor City will pay a massive £11,500 per year in business rates.

West Midlands prove best for investment

Our specialist research team also looked at the average amount of funding received per UK region.

For this category, we used exclusive data from our own Startups 100 index, an annual ranking of the 100 most disruptive and innovative UK small firms.

We found that the average amount of funding received by businesses in the West Midlands is just over £2 million – an astonishing number, and over half a million GBP more than runner-up north-west England.

Surprisingly, the south-east region’s proximity to London did not equal greater investment.

On average, businesses in cities like Southampton and Brighton received just £583,339 per organisation.

Cllr Ian Ward, Leader of Birmingham City Council, told Startups: “I believe that 2022 is the beginning of a golden decade of opportunity for Birmingham. Birmingham was once known as the city of a thousand trades, and the entrepreneurial spirit of Birmingham’s past can be felt strongly today.

“With the arrival of HS2 this decade, investment will continue to flow into our city, providing jobs and opportunities for our residents.”

What does your business need help with?

Best City for Business Activity: Manchester

CPT-4524_Startups Cities 2022 - Business Activity

Every one of our top 25 cities has a thriving business community with tons of exciting success stories.

But our researchers found that the top UK city for business activity is Manchester, thanks to its impressively high marks across every category.

True to its worker bee symbol, Manchester is a hive of business activity. The home of Coronation Street is at the very heart of the Northern Powerhouse, and performed particularly well for average number of SMEs (23,445) as well as annual growth rate.

Enterprising spirit can also be spotted in second-place Leeds, while Brighton once again came third thanks to an impressive new business percentage increase of 10.7%.

In the UK, early-stage entrepreneurial activity in 2020 had fallen sharply from its pre-pandemic high as the economy was essentially shut down for long periods due to COVID-19.

This research shows the resilience that UK entrepreneurs across the country have shown by rising to the challenges and opportunities created over the past two years.

Rob Hilton is CEO and co-founder of innovative Startups 100 company PixelMax, an immersive communications platform based in Manchester.

Hilton said: “Two of PixelMax’s three co-founders are from Manchester, and we are proud to be based here. The city has fostered great investment and innovation and encouraged amazing tech talent, making it the perfect home for PixelMax.

“Our team has rapidly grown within one year and we have subsequently moved to Enterprise City, a space that brings together a fantastic array of early-stage tech companies under one roof – it’s magnificent for collaboration.”

Positive growth across the UK

Data from the Centre for Cities high street spend tracker recently revealed that the UK’s regional towns and cities are showing faster growth and COVID recovery compared to London.

Indeed, the results were encouraging when we examined the business mortality rate of each of our top 25 cities.

This category looked at the number of new businesses registered in 2021, and how their growth compared to 2020.

There was only one UK city in our top 25 that didn’t host more new businesses in 2021 compared to 2020 – indicative of a positive movement in the COVID-19 economic recovery effort.

At the top of the list was Swansea, demonstrating a huge new business growth of +27% – over 6% more than runner-up Southampton. This is despite Swansea coming just 18th in number of small businesses.

Swansea also came first for high street recovery, as its footfall and spending both increased overall in 2021. This could indicate that lower rent costs are more likely to encourage new business growth.

Cllr Bev Craig, Leader of Manchester City Council, explained: “We have worked hard in recent years to create a city that supports new business and provides opportunities for Manchester people to share in the success of the city's growth.

“The city is home to a number of business ecosystems – such as the Sharp Project and our Local Enterprise Zones – which provide low-cost office spaces that allow fledgling businesses the opportunity to grow, and also to collaborate with like-minded businesses who are on the same growth journey.”

Where are you looking for office space in?

Best City for Talent: Edinburgh

cpt-4524_startups_cities_2022_-_talent

As any business owner will tell you, employees are one of the most important factors in any company.

This is particularly true for startups – as you try to establish your name and grow a loyal consumer base, the people you employ are absolutely vital to your company’s scalability and internal culture.

Being situated close to a large pool of talented and skilled people is therefore hugely beneficial for businesses.

University towns and cities therefore score highly for talent, and it’s no surprise to see that Edinburgh topped our list for hiring and recruitment potential.

Sonny Charles is Business Manager at Edinburgh-based Gleann Mòr Spirits Company, an alcohol manufacturer and retailer. Charles explained to us: “Edinburgh has a village feel to it, which means the spirits community all work closely together. The vibrant atmosphere draws some of the world’s best talent.

“The city’s rich culture and history make it the perfect place to launch a new business.”

The home of the world-famous Fringe festival ranked number one for percentage of highly-skilled workers, with 65.4% of its population having an NVQ4 qualification or above – that beats runners-up Oxford and Cambridge by more than 3% each.

Edinburgh also has the third-lowest number of unemployed people and came fifth-highest for number of students.

Brighton and Cambridge most attractive cities for job seekers

Despite having the second-largest number of students, Birmingham ranked 21st for highly skilled workers.

Just 37.3% of its population have an NVQ4 qualification or above, indicating that the city might have an issue with graduate retention.

In comparison, Brighton and Cambridge had two of the lowest numbers of students but both scored highly for percentage of highly skilled workers.

This suggests that these are two of the most attractive cities for job seekers or new graduates.

Cllr Kate Campbell, the City of Edinburgh Council’s Convener for Fair Work, said: “Edinburgh consistently tops polls as one the best places in the world to live, work, study or visit. It is home to some of the best universities in the UK and the world, which help build the skills we need for Edinburgh’s future by creating new technologies that are delivering a bright economic future for the capital and generating opportunities across our communities.”

Best City for Wellbeing: Newcastle

cpt-4524_startups_cities_2022_-_wellbeing

The home of the Magpies, Ant and Dec, and the bakery chain Greggs; Newcastle is a true business Angel of the North with industry and innovation at its heart.

In our 2017 ranking, Newcastle dominated the list in personal areas such as housing prices and childcare costs, making it our top city for work-life balance.

It hasn’t left that title behind, and comes in pole position as our best city for wellbeing in 2022.

John Ryder is the founder and CEO of Hive, an employee voice platform. Here’s what he told us: “From a wellbeing perspective, Newcastle is a great place to start a business – especially since the average startup employee is part of the younger demographic.

“The cost of living in the area is quite low compared to other major UK cities, but there’s still so much to enjoy – whether that’s the famed nightlife, rapidly improving restaurant selection, or surprisingly rich cultural offerings.”

This is thanks to its proximity to green spaces, as well as its low average cost of weekly childcare (£211.15 per week).

The most expensive city to live in was Cambridge, which charges almost £10 per day more for weekly childcare than Newcastle, and was also the most expensive location for property costs.

Cambridge did score well for its number of hospitality and leisure businesses, suggesting that prospective employees would be more likely to move there for the local amenities than the green space.

Jen Hartley, Director at Invest Newcastle, told Startups: “Newcastle is a fantastic place to live, work, study and grow a business.

“Surrounded by green space – even in the centre – Newcastle boasts some of the lowest commute times in the country, and the coast is only 20 minutes from the centre. Oh – and house prices are 43% less than the UK average.”

Oxford is the UK’s greenest city

Employers and business managers are starting to acknowledge and embrace the importance of wellness at work and the economic benefits of working in a place that is somehow more connected to nature.

Our research shows that Oxford is the greenest city in the UK. On average, a local park or playing field is only 276 metres away wherever you are located in the city, making its rural areas some of the most accessible on our list.

Oxford also has the highest number of parks within a 1000 metre radius, with an average of 8.2 – and an average garden size of over 200m².

In contrast, seaside town Hull had the worst score for nature. Its citizens have to travel over 400 metres on average to find a park or green space.

The city does, however, have the lowest average property cost, with houses averaging less than £125,000.

Best City for Infrastructure: Glasgow

cpt-4524_startups_cities_2022_-_infrastructure

Our research found that our second-place city, Glasgow, also offers startups the best location for infrastructure.

Efficient transport networks are important for business communities to thrive. They enable staff to get to work easily, and ensure that products and services can be delivered cheaply and quickly.

James Hughes is founder and CBO of Brewgooder, an ethical beer brand based in Glasgow. Hughes told us: “There’s a sense of community in Glasgow greater than probably any other city I’ve ever stayed in. I think that goes a long way, having that hyperlocal network of people to act as your initial prospects and customers.”

But infrastructure is now more than just physical structures and facilities. Today’s businesses rely just as much on road networks as they do on mobile phone networks and the internet.

As we reported last year, 54% of businesses are planning to use a hybrid working model by summer 2022.

With this in mind, we also looked at average broadband speeds, as well as 4G and 5G capabilities, to work out the top city for remote working companies.

Topping the list was Liverpool, which has excellent internet speed and is also one of the few cities with 5G capability. Glasgow came in second, while Coventry was third.

Cllr Angus Millar, Depute City Convener for Inclusive Economic Growth at Glasgow City Council, said: “Glasgow is recognised as a leading city for startup businesses for a number of reasons, including its very effective support infrastructure and strong partnerships between the public and private sector.

“With its highly skilled workforce and notable growth in key sectors such as finance, technology and life sciences, Glasgow offers strong opportunities for start-up growth.”

Plymouth boasts shortest commute time

One of the biggest benefits of working outside of London is a shorter commute time. Commuters in the capital spend, on average, almost one hour and 20 minutes travelling into work.

We looked at the average travel time into the centre of each city on our list to find the destination with the most time-efficient work route. Plymouth won this round, with locals travelling an average of just 16 minutes to reach the office.

But it was fellow port city Hull that came out on top for affordable transport. Hullensians spend an average of just £8.50 per week travelling to work – that’s £10 less than people in Bristol.

Midlands wins for green infrastructure

Sustainability is another big topic driving the direction of local authority investment.

As the UK works towards its goal of reaching net zero by 2050, councils are looking to find new ways of cutting carbon emissions and reducing waste.

We examined the top 25 cities based on four key metrics: net zero target, recycling rate, carbon footprint, and average carbon emissions to see how they are responding to the issue.

Our overall winner was Norwich, which has had the highest carbon emissions decrease (53%) since 2005. It also had a top 10 finish for recycling rate, and boasts a relatively low carbon footprint for its size.

The city with the worst carbon footprint is estimated to be Manchester, which just pipped Birmingham to take the undesirable title.

Another factor we looked at was a city’s number of electric vehicle charging points.

As increasing numbers of consumers begin driving hybrid or electric vehicles, the question is: which UK city is best placed to accommodate this increase?

The overwhelming winner was Coventry, which we found to have 481 electric vehicle charging points at the end of 2021.

A recent announcement by Coventry City Council even stated that 400 more EV charging stations will be installed in the city by the end of 2023 to help residents feel more confident about making the switch to electric vehicles.

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Methodology

Support

  • Number of available business premises
  • Average business rates
  • Average commercial rent costs
  • Average amount of funding per region

Business Activity

  • Number of existing small businesses per city
  • Average high street footfall 
  • Average annual growth rate
  • High street spend
  • Average business mortality rate (calculated using business births and deaths)

Talent

  • Total working adult population
  • Average number of students
  • Percentage of unemployed jobseekers
  • Percentage of highly skilled workers

Wellbeing

  • Cost of living – average house price and average weekly cost of childcare
  • Green spaces – average distance to a park, garden size, and number of parks
  • Leisure – percentage of employees in retail and hospitality

Infrastructure

  • Digital infrastructure – average internet speed, 4G and 5G capability
  • Transport – average commute time, average travel card cost, and number of electric charging points
  • Green infrastructure – estimated carbon footprint of each city, net zero target, recycling rate and emissions decrease

Why did we not look at London?

Many news outlets often automatically assume that the capital is the best place to launch a new product or service, which can lead to data bias.

In actuality, the latest ONS figures on the UK’s business demography show that, while London has the most startups, it also has the highest death rate (12.1%).

This figure is 2.4% higher than in the Yorkshire and Humber region, where our top city – Sheffield – is located.

Earlier this month, the UK government released its landmark Levelling Up white paper, which promised that regions across the country will receive additional funding to encourage entrepreneurship and level out the playing field.

We want to support the Levelling Up agenda and highlight the amazing developments and opportunities that are happening around the UK and Ireland.

Conclusion

It’s impossible to state categorically that one city is a better guarantor of startup success than another. The lottery that is entrepreneurship means that one firm in a rural setting may prosper, while an urban company may fail.

What this index does show us is that every UK city is different, and empowers new business in unique ways.

Remote-working businesses, for example, will do best in Liverpool, which topped our ranking for digital infrastructure. Offline businesses are more likely to thrive in Swansea, which shows the best high street recovery post-COVID and has the lowest average commercial rent.

So, whether they’re based in England, Scotland, Wales or Northern Ireland, every one of our top 25 cities and communities are providing unique and inventive solutions that can bring value to any startup.

Do you dream of starting a business?

There’s a lot to consider when setting up a new startup. Thankfully, our expert team is on hand to take you through the necessary steps.

Read our comprehensive guide on How to Start a Business in 2022 to find out more.

If you’d like to know more about how the Startups Cities Index 2022 was calculated, email us at hello.startups@mvf.com for a full breakdown of the results.

The Startups Team

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