Where are the most successful new businesses starting in the UK?

It’s definitely London. Or Reading.

Latest figures from The NatWest Regional PMI® survey for June suggests London remains the UK’s fastest-growing region at the midway point of the year, as other areas see business activity fall. 

However, a new study from CMC Markets suggests that Reading is the city in the United Kingdom with the highest percentage of successful new businesses started over the past five years. 

The CMC data compared the number of businesses incorporated in the country’s 25 largest cities between December 2017 and December 2022 to the number of companies that went into administration, liquidation, or dissolution in the same period.

So London or Reading? Where are the most successful new businesses starting up?

London calling

According to the Natwest survey, London continues to lead the way, with regional business activity growth primarily driven by the capital during the first half of the year. However, as the second quarter drew to a close, more parts of the UK witnessed a decline in business activity. 

London, despite its overall strong initial performance, posted its slowest rise in output for three months.

Reading leads the way

The research conducted by CMC Markets paints a different picture with Reading standing out as the city with the highest percentage of successful new businesses in the UK. The study utilised Endole, a business intelligence software, to analyse the business landscape in the country’s largest cities. 

Only 0.13% of businesses launched in Reading during this period went into liquidation between the specified years, meaning Reading clinched it for the lowest percentage of closures. 

This remarkable success rate positions Reading as the #1 hub for entrepreneurs. 

Thriving business hubs

Apart from Reading, other cities across the UK have also emerged as thriving centres for new businesses according to the CMC data. 

Stoke-on-Trent lands in second place, with 6,228 new businesses opening in the last five years and just 13 reported closures.   

Plymouth lands in third place with just 0.27% of new businesses struggling to survive, followed by Welsh capital Cardiff with just 58 closures.  

Challenges and opportunities

The Business Activity Index, which tracks the monthly change in the output of goods and services across the private sector, indicated that only seven out of the twelve monitored regions recorded growth in business activity in June. 

In addition, regions such as London and Scotland still faced elevated rates of inflation due to increasing wage bills. 

Research from CMC recently identified the UK areas where financial concerns may be mounting fastest – giving small businesses in these regions extra incentive to be aware of their customers’ concerns.

The index data did also bring some positive news, however. 

Price pressures eased across the country, with all regions recording a slower rise in business costs in June, due to inflation easing. 

Conclusion

As the conflicting Natwest and CM Markets data indicates, there is no straightforward answer to the question of which UK city hosts the most successful new businesses.

While London continues to dominate as the UK’s fastest-growing region, Reading’s low levels of closures have helped to solidify its reputation as an entrepreneurial safe space and gained the Berkshire town the top spot for now. 

Other areas have experienced a decline in business activity in the past few months, but with price pressures easing nationwide, it’s hard to accurately determine where the next batch of successful businesses will come from once startups are out of survival mode.