Revealed: The cities where SMEs feel most vulnerable

Hull, Liverpool and Blackburn are the places in which small businesses feel most exposed to public spending cuts and the lingering effects of recession.

by Elizabeth Anderson
Last Updated: 16 Jul 2013

Towns and cities in northern England have been worst hit by public sector spending cuts, and this is having a knock-on effect on the region’s SMEs which are heavily dependent on local demand.

According to the thinktank Centre for Cities, small and medium enterprises in Blackburn, Hull and Liverpool are particularly feeling the strain. At the other end of the spectrum, businesses in Cambridge, Crawley and Reading have been more insulated from the austerity measures imposed as a result of the recent recession.

The study, commissioned by insurer Zurich, found that almost two thirds of SMEs in some cities rely on trade from local customers, rather than selling further afield or exporting overseas.

This means that SMEs in poorer places have become over-reliant on local trading and are therefore more exposed to job cuts, falling wages and weak consumer confidence.

SMEs represent 99% of businesses in cities and provide around half of all private sector jobs, meaning they are critical to the success of the national economy, Centre for Cities says.

It has urged UKTI, the government body which supports exporters, to work more closely with local partners to help businesses tap into other markets. The thinktank also says the government should ‘simplify the confusing mix of business support’ currently on offer to small businesses.

‘The government must ensure that local partners, including Local Enterprise Partnerships, have a clear role in delivering national business support policies,’ Alexandra Jones, Chief Executive of Centre for Cities, said.

‘High quality, evidence based Local Growth Plans will be critical to helping UK cities navigate the bumpy road of recovery, while support from national organisations such as UKTI, as well as local partners will be vital to helping SMEs diversify their customer base and even move into exports.’

(See below for the full results)

Casualties of austerity: the five cities where SMEs feel the most vulnerable:
Rank City Welfare cuts 2012 Weekly earnings % of SMEs relying on local markets
1 Hull -£149 £361 47%
2 Liverpool -£192 £424 50%
3 Blackburn -£192 £374 57%
4 Sunderland -£172 £411 50%
5 Middlesborough -£155 £415 51%
The five cities where SMEs are the least vulnerable:
Rank City Welfare cuts 2012 Weekly earnings % of SMEs relying on local markets
1 Cambridge -£103 £574 47%
2 Crawley -£125 £612 47%
3 Reading -£116 £594 47%
4 Aldershot
-£121 £543 43%
5 York -£85 £486 45%

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