Statistics compiled by financial information firm DueDil looked at the number of companies being formed in the first quarter of 2017 compared to the first quarter of last year in the UK’s largest towns and citties.
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A total of 1,596 company formations and registrations were recorded in Edinburgh the first three months, down from 1,742 in the same period last year, a drop of 8.4 per cent in the capital which was named as the UK’s Entrepreneurial City of the Year in 2016.
DueDil said nervousness over Brexit may have been responsible for the drop.
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However, Glasgow saw modest growth of 2.5 per cent in its start-up rate, with 2,071 companies being formed compared to 2,021 in 2016. Aberdeen also saw a similar percentage rise, with 481 companies being formed compared to 470.
Dundee was the worst-performing city in Scotland with a drop from 382 to 346, equating to a fall of 11.7 per cent.
The UK-wide figures showed Salford saw the highest start-up growth rate with 1,393 new companies formed in the first quarter of this year, a growth rate of 85.5 per cent.
Second place was Leicester, which experienced growth of 34.5 per cent followed by Norwich, Liverpool and Oxford.
London recorded a modest start-up growth rate of 5.1 per cent although not surprisingly it continued to produce more start-ups than anywhere else in the UK, with 57,235 companies starting up in the capital in the first quarter of 2017.
Based on the numbers from last year and the start-up growth for the first quarter of 2017, DueDil have predicted 668,759 companies will be set up this year, a drop of 17,096 compared to 2016.
Justin Fitzpatrick, chief operating officer of DueDil, said: “The overall decrease in start-up growth across the UK, is perhaps demonstrating a cautious attitude towards enterprise with Brexit looming.”
Fitzpatrick said against that backdrop, banks and alternative finance providers have an opportunity to play a role in growth through investment.
“Interestingly, just a handful of the UK’s major cities made the overall top 20 for start-up growth, with cities such as London, Birmingham, Glasgow and Leeds all absent from the top rankings,” he added.
• READ MORE: Number of business start-ups falls in Scotland
The report comes after analysis published by Bank of Scotland earlier this year found that company start-up numbers have fallen in Scotland in the last five years, however not as significantly as the UK as a whole.
Some 3 per cent fewer new businesses were started in Scotland while the UK figure dropped by 19 per cent.
Wales saw the largest decline in new start-ups falling by more than a quarter and England was also hit hard, declining by about a fifth, equating to nearly 100,000 fewer new businesses created in 2016 compared to 2011.