However that drive is not a simple matter of London being the place where that activity takes place, it is also its inspiration and its source. Of the 581,173 new businesses registered at Companies House in 2014, almost a third (184,671 – 32%) were located within Greater London. By this measure London’s share of new business activity was over ten times that of any other UK city. The figure for Birmingham – genuinely Britain’s second city – was 18,337, with Manchester third in the list at 13,054.
For all the talk of Northern Powerhouses, it seems that the energy, initiative and entrepreneurial zest that London encapsulates is the key driver for the British economy. Figures elsewhere underline the significance of small and medium sized enterprises. For example, data collated by Hiscox shows the breakdown of UK economic activity by sector and in relation to the weight of that activity conducted by SMEs – defined as companies employing fewer than 250 staff. The findings suggest that, as with the figures for start-ups, it is the SME sector which drives economic growth in the UK.
Precisely a third – 33% – of all information and communication turnover in the capital is accounted for by SMEs. The figure is 73% for real estate, 50% for professional, scientific and technical activity, and 61% for human health and social work activities. Bearing in mind that the city is host to the headquarters of many multinational concerns, the overwhelming contribution of these smaller concerns to the overall economic activity of the capital is striking.
The one aspect of the Hiscox data that will raise eyebrows is the relatively low level of activity that SMEs account for in the arts, entertainment and recreational sectors. Such a finding will strike many as being out of step with their own experience of London’s vibrantly creative culture.
Whilst those involved in the creative sector may be quick to point to the relatively low level of financial turnover that many in their sector enjoy, it should be acknowledged that many creatives operate as sole traders. That is to say that their activity may not be reflected in the formal designation of SMEs as applied by the survey. Not many men or women on the Clapham omnibus would recognise the picture of London depicted by this portion of the survey.
Across the piece, London is home to more than 800,000 SMEs which account for almost 50% of all employment throughout the city. The London Enterprise Panel estimates that the aggregated value of this activity is as much as £430 billion annually. The LEP is amongst the formal bodies that actively champions the cause of small and medium-sized enterprises as well as offering practical assistance to those taking their first steps in business.
It is part of an enviable infrastructure and a creative dynamic that make London not only a great place to do business, but the best place in the country – if not the world – in which to start a business. Any talk of powerhouses on a national scale needs to recognise the energy and the strength of London’s SMEs.