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United Kingdom
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United Kingdom
Updated: 18 March 2025
The UK is well known as a hub for new businesses, with an environment beneficial for a new business to thrive and grow, it’s unsurprising that so many businesses choose to open up here. With a strong entrepreneurial culture, a diverse and skilled workforce, and many opportunities for funding, grants, and support networks, the UK provides a solid foundation for business growth and success.
However, with so many businesses setting up across the country, competition is fierce. Choosing the right location for your business is crucial to ensuring it thrives. With that in mind, Funding Circle has explored the UK’s top new business hotspots to reveal the best places for your venture, whether a start-up or an SME taking the next step in their growth journey.
Why is the UK a popular place to start a business?
According to the 2025 Start Up Ambition Report, almost half of UK adults (47%) are thinking about starting a business or side hustle in 2025, a 12 percent increase on this time last year. In 2024, it’s reported that over 300,000 new businesses were started in the UK, but what makes the UK such an attractive option for would-be business owners?
Competitive tax environment: The UK offers competitive corporate tax rates, which can be attractive for new businesses looking to minimise their tax burden.
Access to funding: The UK has a robust venture capital ecosystem, providing startups and SMEs with opportunities to secure early-stage funding and access to business finance.
Skilled workforce: The UK is home to a highly educated and skilled workforce across a wide range of industries, making it an attractive destination for businesses looking to scale and innovate.
Global access: London, as the UK’s leading financial hub, provides businesses with direct access to global markets and a vast network of international clients. Alongside this, other UK cities are also emerging as key players in the global economy, with cities like Manchester, Birmingham, and Edinburgh having strong financial and business sectors, offering growing opportunities for trade and investment.
Regional business hotspots
Tracking the number of VAT and/or PAYE-based enterprises gives a great picture of what the business landscape looks like in the UK. The UK business landscape is mostly made up of companies that are in the following sectors: professional, scientific & technical services (3 million businesses), construction (2.5 million businesses), and business administration & support services (1.5 million businesses).
While these sectors dominate the UK business landscape, there are key regions across the UK where these sectors thrive. The North West, Scotland, South East and London find their biggest industries in the professional, scientific, & technical sectors.
The UK’s strongest business hubs are centred in London, the South East, the North West, and Scotland. London is a global leader in finance, professional services, and tech, while the South East benefits from proximity to London, with key business parks and R&D centres. The North West, particularly Manchester, is emerging as a tech and media hub, and Scotland is seeing a prevalence of finance, tech startups, and research. These regions are also home to the top UK universities, which supply a highly educated workforce and innovation. Alongside this, corporate headquarters in these regions fuel demand for professional services, creating strong business networks across the UK.
On the other hand, in the North East, Yorkshire, East Midlands, West Midlands, East England, South West England, and Wales, the primary business type is construction. Large rural and suburban areas across the UK, particularly in the East and West Midlands, South West England, and Yorkshire, offer land for housing, infrastructure, and commercial construction projects. Strong manufacturing and logistics sectors in the East and West Midlands require new industrial spaces, while urban regeneration projects in the North East and Wales are revitalising old industrial sites. Additionally, lower operational costs in these areas, compared to London and the South East, attract construction firms seeking more affordable land, labour, and materials.
New business growth across UK regions in 2024
While the UK maintains its prevalence for business across the UK, where are we seeing the biggest growth for new businesses? The location of your business can significantly impact your success, depending on your industry and whether you operate from a physical premises or online. Regardless of your setup, assessing local competition is a key step in planning your business strategy for growth and can also give an idea of where your business could thrive.
Out of all countries in the UK, England saw the biggest number of new businesses set up in 2024, seeing 267,005 newly registered businesses. While London leads the way with the highest number of business registrations in 2024 at 66,920, the data sees strong growth in the South East and North West.
The South East (41,385 new businesses) holds strong as the second-best performer, benefiting from London’s economic spillover, lower operating costs, and business-friendly environments in cities like Brighton and Oxford. While it doesn’t rival London in volume, the South East presents a strong alternative for startups and businesses looking for accessibility without the capital’s overheads.
The North West (32,940 new businesses) is the strongest business hub outside the South, particularly in Manchester, where tech, media, and finance industries continue to grow. It outperformed Yorkshire and The Humber (21,960) and the North East (8,745) significantly, reinforcing Manchester and Liverpool’s status as key startup locations in the north.
However, the North East struggles the most, registering the second-lowest total in the country. This suggests a need for more investment in business infrastructure and incentives to encourage entrepreneurship in cities like Newcastle and Sunderland.
| Regional | Q1 2024 | Q2 2024 | Q3 2024 | Q5 2024 | Total 2024 |
| London | 18,415 | 17,225 | 16,625 | 14,655 | 66,920 |
| South East | 11,285 | 11,260 | 9,960 | 8,880 | 41,385 |
| North West | 9,085 | 8,685 | 8,190 | 6,980 | 32,940 |
| East | 8,025 | 7,645 | 7,020 | 6,070 | 28,760 |
| West Midlands | 7,225 | 6,670 | 6,250 | 5,330 | 25,475 |
| Yorkshire and The Humber | 6,035 | 5,895 | 5,340 | 4,690 | 21,960 |
| South West | 6,070 | 5,895 | 5,180 | 4,620 | 21,765 |
| East Midlands | 4,985 | 5,220 | 4,825 | 4,045 | 19,075 |
| Scotland | 4,920 | 4,925 | 4,365 | 3,815 | 18,025 |
| Wales | 2,760 | 2,695 | 2,545 | 2,025 | 10,025 |
| North East | 2,355 | 2,520 | 2,090 | 1,780 | 8,745 |
| Northern Ireland | 1,560 | 1,500 | 1,735 | 1,465 | 6,260 |
Growing sectors for new businesses in the UK
Although some sectors dominate the UK market, year-on-year growth in specific industries highlights key business trends and evolving consumer demand.
In 2024, we have seen a growing demand for business administration and support services. This is due to the need for non-core departments such as HR, IT and Payroll, allowing businesses to focus on their core offering while reducing internal costs. Alongside this, the growth in flexible working, tech advancements such as cloud software and automation, and the need for scalable business solutions make these services more important than ever. As companies expand, the demand for further administrative support is essential as locations increase; all these factors drive growth in this sector.
A changing economy and financial pressures have led to rising consumer and business needs for loans, insurance, and investment products in 2024, leading to business opportunities within the finance and insurance sectors. As fintech sees further technological advancements, such as digital payments, make it more accessible and efficient for both consumers and businesses. Additionally, the changing regulatory landscape has created more opportunities for startups and SMEs to offer tailored products and services. Factors such as the increasing risk of cybercrime and climate change have also seen a growing need for insurance services. These factors make finance and insurance an attractive sector for new businesses seeking to capitalise on these emerging trends.
In 2024, the accommodation and food services sector continues to grow, with new business growth up 3% year-on-year. As domestic and international travel rises, so does consumer demand for hotels, restaurants, and unique hospitality experiences. The post-pandemic sees reignited consumer interest in dining out and travel, while the growing popularity of delivery services and online food ordering reflects a shift toward convenience-driven lifestyles. This changing landscape presents exciting opportunities for businesses to cater to changing consumer habits and preferences.
| Sector | 2023 | 2024 | % Increase |
| Business administration and support services | 31,385 | 36,740 | 17 |
| Finance and insurance | 4,125 | 4,315 | 5 |
| Accommodation and food services | 28,890 | 29,635 | 3 |
| Real estate | 12,080 | 12,300 | 2 |
| Education | 5,090 | 5,215 | 2 |
| Motor trades | 7,790 | 7,905 | 1 |
| Wholesale | 9,160 | 9,235 | 1 |
| Retail | 26,220 | 26,450 | 1 |
Jerome Fernandez at Funding Circle comments, “The growth of new businesses is essential to strengthening the UK economy, and providing entrepreneurs with access to finance is key to turning their vision into reality. Despite recent challenges, data suggests a positive outlook, with ONS business insights revealing that 22% of trading businesses expect their turnover to rise by March 2025, and 20% anticipate overall performance growth within the next year. The data underscores the resilience of UK entrepreneurs, the shifting regional business dynamics, and the continued importance of financial support and policy initiatives to sustain and encourage business growth in the years ahead.
When starting a business, choosing the right location is crucial for success. It’s important to consider the services you offer, how they fit within the local market, and the level of competition in the area to ensure your business can thrive. While concerns over taxation and rising costs persist, a business credit card can offer a flexible financial safety net, helping entrepreneurs to hit the ground running, manage cash flow, and keep their businesses running smoothly.”
A cashback business credit card turns your regular expenses into rewards, essentially giving you a discount on everything you buy. For example, Funding Circle’s Cashback Business Credit Card offers an unbeatable 2% cashback on all your spending for the first six months, followed by 1% cashback thereafter. Every business purchase, from office supplies to inventory, rewards you.
While a Cashback credit card offers great rewards for everyday spending, sometimes you need a more flexible working capital solution. This is where products like FlexiPay from Funding Circle stand out, offering a hybrid approach that combines the convenience of a credit card with the flexibility of a line of credit, giving businesses the ability to spread their payments into 1, 3, 6, 9 or 12 monthly instalments. Whether you need to make card payments on the go or transfer money directly to a supplier or into your business bank account, FlexiPay gives you quick access to credit when you need it most.
Since our launch in 2010, we’ve helped over 103,000 UK businesses secure £13.6 billion in funding to support their growth. Over the years, Funding Circle has evolved too—from a peer-to-peer lender to the UK’s leading business finance platform. Today, we provide SMEs with the funding they need through business loans, asset finance, business credit cards, and flexible lines of credit.
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