Scotland home to five worst areas for business creation

All five of the worst areas for new business creation in the UK are in Scotland according to figures which show it is lagging significantly behind on start-up performance.

Aberdeen is the worst area for business creation (Photo by Jeff J Mitchell/Getty Images)

The net number of new businesses created in Scotland – after taking account of closures - is 2.4 per 10,000 people, less than a fifth of the UK average according to research by accountancy firm UHY Hacker.

Jon Warsop, group chairman at UHY Hacker Young, said the Scottish figures “should serve as a wake-up call to politicians on both sides of the Border”.

Of the worst performing areas out of the 362 in the UK that they studied, Clackmannanshire was ranked bottom followed by the Western Isles, Fife, Falkirk and Aberdeen. All five areas showed there were more businesses closing than opening during 2016, the latest year for which Office for National Statistics figures are available.

Aberdeen ranked as the UK’s worst performing major city in the UK for new businesses created with nearly 18 more business closing than opening in the city during the year per 10,000 population, blamed partly on the downturn in oil markets.

Overall figures for Scotland released in January had shown a total of 22,000 businesses were created in 2016, the second worst in the UK with only Northern Ireland coming behind.

UHY Hacker Young said that the low number of new businesses started in Scotland “suggests that more assistance needs to be given by both central government and the Scottish devolved government to Scottish entrepreneurs”.

It pointed out that projects in England like the “Northern Powerhouse” had received substantial political backing and acted as a spur to entrepreneurs.

A Scottish Government spokesman said the number of registered new businesses in Scotland was increasing and is currently at its highest level since 2004.

“However, we know more can be done. Delivering a positive environment for business to thrive drives the Scottish Government’s work. Research has shown an increasing number of adults, particularly young adults, see themselves starting their own business and this suggests our approach is paying off.”

Meanwhile, a report yesterday said business health continued to decline among Scotland’s SMEs in the fourth quarter of 2017. Research by Clydesdale Bank owner CYBG in partnership with CEBR found SME confidence had fallen along with the number of firms operating at full capacity.

CYBG’s chief executive David Duffy said: “SME confidence appears to be in short supply as many small firms are seeing rising business costs alongside continuing skills shortages.

“Businesses are scaling back their investment and borrowing due to the wider economic uncertainty, contributing to the decline in the index”.