Top 20 European cities for SMEs: UK behind Germany and Spain

Our highest ranked is Birmingham, but hefty costs leave London lagging at 17th.

by Stephen Jones
Last Updated: 09 Apr 2019

Britain is rightly proud of its reputation as a good place to start, grow and run a business. But especially with Brexit looming, it’s important not to take it for granted.

In a recent report looking at the best cities in Europe for enterprise, only one UK city appears in the top ten. SumUp’s Small Business Index 2019 ranks Europe’s 100 most populous cities on how conducive they are for supporting small business growth. Birmingham is the UK’s best performer at tenth. Glasgow is next in 11th place while London lags behind at 17th.

The top two spots are taken by Spain, with Valencia being deemed the best city in Europe for enterprise, closely followed by Madrid. Seville also makes the cut.

The Germans - who have some valuable lessons for British business -  boast five cities in the top 20, led by Berlin.

The headline rankings might appear somewhat concerning, but as ever it’s important to look at the detail. The research, in its first year, judges cities on four categories: the types and variety of firms; the business density; the level of support and incentives; and the amount of available commercial space.

London scores top marks for the level of business support and boasts one of the highest densities of small businesses in Europe, but is let down by high rental costs and a lack of available business space rather than any absence of entrepreneurial vigour.

In comparison, businesses in Birmingham are exposed to the same level of support, but also benefit from cheaper rental prices and high levels of recent investment. The potential windfall and opportunities provided by HS2 - whenever it is actually finished - will only continue to grow the city’s attraction.

But that doesn't mean we should not be weary. Emma-Jane Flynn, managing director of the 500-strong entrepreneur networking group The Supper Club, says that it is not a paucity of office space preventing businesses from growing, but rather finding the talent to fill them, something she says will only be compounded by the continued uncertainty surrounding the UK’s departure from the European Union.

"To de-risk, many are looking at alternatives such as following their talent back to the mainland and opening an office there, or expanding into the US market," says Flynn. "UK plc is going to have to do more for its employees to stay in the UK and to attract employees from overseas."

The government couldn’t be accused of ignoring SME talent needs entirely. At the 2018 Conservative party conference, Chancellor Philip Hammond said he wants to help 10,000 small businesses by 2025 by pledging £11m for mentoring and management training, and a further £20m to grow business networks. Whether this is sufficient to create the right environment for them to thrive is a different question altogether.

The top 20 rankings

  1. Valencia: 10.00

  2. Madrid: 9.91

  3. Vienna: 9.82

  4. Berlin: 9.73

  5. Barcelona: 9.64

  6. Warsaw: 9.55

  7. Essen: 9.45

  8. Athens: 9.36

  9. Prague: 9.27

  10. Birmingham: 9.18

  11. Glasgow: 9.09

  12. Dusseldorf: 9.00

  13. Hamburg: 8.91

  14. Seville: 8.82

  15. Duisburg: 8.73

  16. Paris: 8.64

  17. London: 8.55

  18. Naples: 8.45

  19. Zurich: 8.36

  20. Milan: 8.27

Image credit: Ivan Rivero/Pexels

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