Businesses in isolated areas survive longer than those in London

SMEs launched outside London have higher survival rates than their counterparts in the capital, according to a new study.

The research, commissioned by eBay UK and undertaken by consultancy Development Economics, utilised data from the Office for National Statistics (ONS).

It found that just over a third (38.6%) of London start-ups survived beyond their first five years. This compares to 45% of businesses in the South West, 44% of those in the East of England and 42% of those in Scotland.

Broken down to regional authority level, the study found that businesses founded in the Shetland Islands were the most resilient, with 56% of start-ups surviving beyond the first five years.

Those in Melton in the East Midlands, Purbeck in the South West and North Norfolk had the next best survival rates (53% each), followed by Selby in Yorkshire and the Humber (52%). No local authority in London figured in the top ten most resilient locations.

The authority where new businesses were most likely to face insolvency was Redbridge. The London Borough had a five-year survival rate of just 36%, compared to a national rate of 42%.

Most of the 10 authorities with the best survival rates were located in largely rural areas, including North Norfolk, Rutland and the Cotswolds.

Development Economics managing director Steve Lucas suggested that businesses located in Shetland and other isolated areas could face less competitive pressure from businesses in neighbouring locations.

It could help businesses in terms of survival, he said, if local customers had to invest time and costs in searching for and accessing alternative providers.

Ebay UK vice president Tanya Lawler said that the research highlighted the vital role that start-ups played in providing stability and employment within the UK economy.

The study follows an earlier report by Sungard, in which London failed to make it into the top three best UK cities for business, thanks in part to high rental prices and the volume of competition. That study found that the capital still came out on top for tech-based businesses however.

By Phil Smith

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