There are 5.5 million businesses in the UK, and 5.45 million of them have fewer than 50 employees. These small businesses are an economic and cultural asset to the country.

But they have faced a tough few years with the double blow of Covid and Brexit disrupting supply chains and adding economic and administrative obstacles to trading with Europe. Some 20,000 small exporters with fewer than ten employees have ceased exporting to the EU since the new rules came into effect, and the number of small businesses in the UK fell by –1.03% from 2023 to 2024.

However, the UK is in a moment of fresh optimism: the number of small businesses successfully applying for credit is increasing, and one-fifth of small businesses plan to “reboot growth plans” in 2025. Derk Bleeker, Chief Commercial Officer at Sage, notes that by controlling costs, small businesses have “managed to become more profitable, though many are waiting for a more stable economic and political climate before making major investments.”

To find the UK cities where this optimism is strongest, we analysed Office for National Statistics data for every local authority and city and calculated the percentage growth in the number of small businesses in each area from 2023 to 2024.

Key Findings

• The number of small businesses in Aberdeen has grown by +1.95% since 2023, the highest growth of any UK city.
• Northern Ireland is the region with the fastest growth in small businesses, with a +0.85% rise year on year.
• The London borough with the greatest rise in small businesses is Camden (+4.01%).

Aberdeen is the UK’s Fastest-Growing City for Small Businesses

First, we identified the cities with the most new small businesses. Aberdeen is ahead with a 1.95% rise in small businesses over the past 12 months. Aberdeen is home to the UK’s favourite local business, according to a national poll, and was recently ranked as the best Scottish city to work for a small or medium-sized enterprise (SME).

“Small businesses thrive here, and Aberdeen has long held the status of being the best place to start an SME due to great start-up support and the highest five-year plus survival rates in the country,” said Russell Borthwick, Aberdeen and Grampian Chamber of Commerce chief executive.

 

 

England’s fastest-growing small business landscape is in Watford, where there has been a 1.75% rise in small businesses year-on-year. Watford Borough Council became the first to adopt the Federation of Small Businesses (FSB) Local Leadership Partnership Pledge in December 2023. “I know how important it is to meet with local businesses regularly,” said Mayor Peter Taylor. “We have been encouraging residents to ‘Shop Local’ and are making sure that small to medium-sized businesses are included in Watford’s decision-making.”

Northern Ireland is The Top UK Region for New Small Businesses

Next, we identified the growth rate in each of the UK’s 12 regions and the fastest-growing authority in each region. The top authority is Oadby and Wigston in the East Midlands, with 4.61% annual growth — despite the East Midlands as a whole losing 1% of its small businesses over the year.

 

 

Northern Ireland is the fastest-growing region, with a 0.85% rise in the number of small businesses. This is despite Northern Irish businesses missing out on the rates relief offered to some English small businesses in the wake of Covid. However, the recent rise in National Insurance (NI) charges to businesses has got local entrepreneurs thinking about such support again.

“I do not think it is unreasonable that the same level of rates relief that small businesses receive in Brighton or Bolton should apply equally in Ballymena or Banbridge or all our towns and cities,” says Glyn Roberts, chief executive of Retail NI.

Camden Sets the Pace for London’s Entrepreneurs

Finally, we looked at the rate of small business growth across London’s 32 London boroughs plus the City of London district. We found that 22 of these areas saw positive growth in the number of small businesses last year. These were led by the borough of Camden, where 1,360 new businesses were established — a net increase of 4.01%.

This period of growth is unlikely to be over: London mayor Sadiq Khan recently launched an £8.7million support scheme for small businesses in an attempt to regenerate Camden’s famous high street and market.

 

 

The borough with the greatest decline in small businesses is Kingston upon Thames (-1.71%). As in Camden, Kingston’s historic market has been touted for an overhaul — although it is still at the research stage, leaving local entrepreneurs bitter towards the council.

“The stuff that we’ve done inside ours has been financed by the company, the council doesn’t maintain them at all. They’re just in terrible condition and too small and dirty,” Phoebe from Oliver’s Bakery told the Kingston Courier. “They do a lot of events but they don’t advertise anything. I’m surprised when I found stuff that’s going on tomorrow in Kingston marketplace, which is shocking when I live here as well.”

Local Landscapes

“There’s no hiding from the fact smaller firms have had a torrid time over the last few years,” said Dame Harriett Baldwin, Chair of the Treasury Committee, back in May. “Unfortunately, what we have found over the course of the inquiry is that there are some instances where banks and regulators are making a tough world for small businesses needlessly tougher.” At the same time, Brexit still has some surprises up its sleeves. New EU rules are set to make trading even within the UK — between the mainland and Northern Ireland — more burdensome.

In such conditions, the ability to develop a thriving local customer base and small business community becomes more pressing than ever. Rather than posing increased competition to their neighbours, these new businesses must therefore be seen as indications of where business is thriving — and may continue to thrive in co-operation in the near future.

Methodology

We analysed ONS data for every local authority and city to calculate the percentage change in each area based on the count of small businesses reported in 2024 compared to the figure reported in 2023.