Research from Everline and Cebr suggests the government's Northern Powerhouse could be a long way off yet as a lack of digital investment leaves the UK's regions trailing in London's wake
The Northern Powerhouse has been both a serious discussion point and source of mild amusement in the Elite Business office of late. First coined by George Osborne over a year ago, the chancellor again made reference to the government's scheme to increase investment in the north of England in his Summer Budget speech. However, new research from Everline, the business e-lender, and the Centre for Economics and Business Research (Cebr) has highlighted the scale of the task facing Osborne, Cameron and Co.
The Everline Small Business Tracker found that businesses in London expect revenues to increase over the next ten years by an average of £162,000 to £528,000 in 2025. This is over twice the turnover expected by small business leaders in the north, who expect growth of just £65,000 to £263,000 in the same period – and a fifth of these business expect no increase at all. But businesses in the north weren't quite as pessimistic as southern businesses outside London. Almost a quarter of firms in the region predicted zero growth in turnover by 2025, with the average small business expecting £61,000 growth in the next ten years. This is in contrast to businesses in the Midlands, which are anticipating growth of £63,000, and those in Scotland, where the average firm is expecting to grow by £80,000.
Why are the regions trailing in London's wake? Well, the research found that a fifth of Britain's small businesses still devote no time to online activity, including e-commerce, with the figure rising to 30% in the Midlands and 22% in the south. And, while 36% of London business owners view online activities as more important to business success than offline, this view is only shared by 30% of businesses in the Midlands, 28% in the north, 27% in Scotland and 26% in the south. A further 10% of businesses said they wish to increase their spend on digital but don't have the financial means to do so, while 11% felt they didn't have the necessary skills.
“A few years ago small businesses could be forgiven for thinking that sophisticated technologies were only within the reach of larger corporations who could afford the up-front investments," said Sam Alderson, economist at Cebr. "However, while there is still more that can be done to reduce the costs, digital technologies are becoming increasingly accessible to smaller businesses. Given the multitude of benefits that technologies can bring […] more could be done to promote and support the uptake of digital technologies in the nation’s small businesses.”
Russell Gould, COO of Everline, added: "Although small business growth has increased dramatically in the last ten years, it’s clear from our Small Business Tracker that more needs to be done to encourage a similar decade of growth and instil confidence in our small business network, especially outside of London.”
Over to you then, George.