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Number of Scaleups in UK Rises but Action Needed to Address Regional Disparities

The number of high-growth, scaling businesses in the UK increased to a record 36,510 – a 3.7% increase over the previous year – according to the ScaleUp Institute. The figures are drawn from the most recent ONS data, covering 2017. This means that the economy added 1,300 companies going through a period of rapid growth.

The national number of scaleup companies, who are defined as those which have grown their turnover or employment by more than 20% annually over a three-year period, has increased by more than one-third over the past five years. There are 35% more scaleups than in 2013, compared to GDP growth over the same period of just 9%.

Scaleups generate more than £1.3trn in combined turnover. This is up 34% on 2016, and compares to a turnover of £1.9trn by all SMEs combined. They employ approximately 3.4m people across all sectors and areas of the UK economy.

Importantly, the growth in the number of scaleups has taken place across the country. All Local Enterprise Partnerships (LEPs) and devolved nations are experiencing a growth rate of greater than 1 additional scaleup per 100,000 of population. The three local areas which have seen the highest scaleup growth relative to their population between 2014-2017 are Oxfordshire; York, North Yorkshire and East Riding; and Thames Valley Berkshire.

“Scaleups are the engine drivers of local economies,” said Irene Graham, CEO of the ScaleUp Institute. “They are twice as innovative as large firms, employ twice as many apprentices, are twice as likely to be operating in international markets, and, significantly, they create high quality jobs. On average, scaleups are 42% more productive than their peers.

“Their aspirations remain high. According to our recent Scaleup Survey, eight out of ten expect to scale again in 2019, generating £1.5bn more in turnover and creating an extra 7,000 jobs.”

Irene Graham added: “It is is encouraging that scaleup numbers are increasing across the UK but it is equally important to note that the rate of growth has slowed from its average annualised rate of 9.3% between 2013 and 2016. The increase in scaleup numbers is driven by having more businesses scaling in turnover, whilst the numbers of those scaling by employment or by both factors has seen a slight decline.

“As this constitutes the first full year of data since the EU referendum of 2016 we will watch closely to see how the decision to leave the EU has affected scaleup confidence, their ability to scale and the ecosystem’s ability to evolve to meet the needs of scaling businesses.”

She said that “large disparities” in scaleup numbers persist at a regional level – the fastest growing regions grow their number of scaleups almost five times faster than the slowest.

“Scaleups continue to face major challenges on five fronts: gaps in talent and skills, access to markets at home and overseas, opportunities to develop leadership, a need for more funding and a lack of flexible infrastructure,” she concluded. “This latest data reinforces the need for continued concerted efforts at a local, regional and national level to address scaling challenges so we are able to meet the Brexit headwinds ahead and achieve sustainable scaleup growth.”

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