Winds of change? Increase in business start-ups – a barometer for growing confidence in the UK economy

A recent article in the Manchester Evening News reported that the North West saw a 10% increase in the number of businesses due to a substantial increase in the number of new start-ups. This is certainly encouraging news. Furthermore, given the current political backdrop it seems all-the-more surprising. After months of anxious uncertainty, could it be that this increase in business initiative reflects a stabilising of the business community and a feeling that things are, very slowly, getting back on track?


That the North West appears to outstripping London where the number of new companies was up by just 6% can only be seen as a positive. New companies means more job opportunities, but it also produces a crucial knock-on effect for local economies. But can this positivity continue through-out the start of 2017? And what are the factors which will shape and drive economic growth in a year that will undoubtedly not be without its fair share of uncertainty?

The general economic context

Despite continued political wrangling, the health of the general economy seems comparatively positive. Indeed, the Guardian reported only last week that the Bank of England looked set to upgrade its forecasts for the UK economy having observed that the steps it had taken had fended off the immediate risk threatened by the Brexit vote.

Closer to home, the latest UK Powerhouse report, produced for law firm, Irwin Mitchell, revealed that Manchester’s growth was still estimated at 2.7% YoY in Q3 of 2016. Furthermore, the report highlighted Manchester’s robust employment growth of 1.6% for the same period.

The fears of a sudden downturn following the Brexit referendum result appear to have receded and though 2017 will be a challenging year, the general view conveyed by the report was positive. Roy Beckett, Regional Managing Partner at Irwin Mitchell noted, in particular, the importance of the fact that the government had re-iterated its commitment to the Northern Powerhouse.

A dynamic business market

Manchester has undoubtedly fared well due to the rich variety and positive performance of its various sectors. The city has, for example, long benefitted from a vibrant retail and leisure market which has been responsible, in part, for driving the economy forward.

Then there’s the dynamic financial services market, which employs some 250,000 across the legal services industry, accountancy, banking and insurance sector. This area of the local economy continues to prosper with new players continually entering the market. Moreover, the creative industries are making an ever-increasing contribution with the growth of MediaCityUK.   

But whilst the above observations may do something to reassure us that Manchester and surrounding North West economy is, so far, holding firm, they do not really explain the full picture.

A growing mood of optimistic determination

We are continually told that uncertainty is bad for business. This may be true to an extent. Big business and the financial markets on which they are listed tend to prefer predictability and the status quo.

However, the general impression seems to be that UK businesses, especially the SME market seem to be determined to take the initiative and drive growth no matter what the political climate or our relationship with Europe may be going forward.

CEO of UK Fast, Lawrence recently noted that “there’s a real determination in the British boardroom to succeed, whatever our relationship with Europe…” UK Fast is a company which provides managed hosting services and supports a vast number of SMEs as well as larger corporates. This gives it a rather good insight into the general mood of Directors and CEOs around the country.

Speaking to the MEN earlier this month, Jones noted that the depreciation in the value of sterling has done much attract foreign investment. “…that investment” he stated, “should tell people that confidence in Britain for the long term is actually incredibly high”.

Despite the initial warning that a climate of uncertainty would stifle investment, there is a general feeling that the SME market, often seen as the real engine room of the British economy, remains resilient. Commenting in the Q3 SME Confidence Tracker produced by Bibby Financial Services, Global Chief Executive, David Postings observed that “there are some green shoots of business optimism as UK SMEs attempt to get back to business”. He continued, “Notwithstanding reports of subdued investment since 23 June, the Tracker for Q3 shows that 75% of SMEs invested in their business over the past three months”.

It is this increase in optimism which is perhaps the most significant factor, encouraging the business community in Manchester and throughout the UK, to remain confident. And it is this confidence, which is in turn resulting in the determination to continue to pursue business objectives either through continued investment or new start-ups.

The road ahead for 2017?

So, we’ve established that the economy and the mood in Manchester and the rest of the UK, is, for now at least, relatively stable. But will this hold firm as we move ever closer to the execution of Article 50. Much depends on matters which are beyond the influence of the business community.

The complex negotiations which will follow the initial triggering of the process to leave the EU will not be without difficulty and much hangs on the skills of negotiation and diplomacy of the UK government. Now is not the time for weakness. Now is the moment for conviction and confidence, with perhaps a dash of bullishness.

2017 will be a challenging year. It would be foolish to assert otherwise. That said, with a plan (albeit slowly and perhaps painfully) emerging over Brexit, together with a robust economy, encouraging signs of foreign investment including the more recent vote of confidence from the US over a future trade deal, it is perhaps not so surprising that businesses, remain quietly confident. It will take strong leadership, clarity of vision and self-belief to ensures this confidence endures.