Business finance experts at NerdWallet conducted a study of 25 UK cities to find out which cities would be most likely to face a recession. The study used data from the ONS and other sources, analyzing the active business population, the survival rate of companies and disposable income, among other factors.
The Bank of England has warned that the UK economy will soon enter recession from late 2022 to late 2024, predicting five quarters of negative growth.
While some companies will receive some government support over the next six months, small and medium-sized businesses will be hardest hit. In light of this, NerdWallet surveyed the cities best prepared to go through a recession and recover the fastest.
Leicester is at the top of the table, scoring high on most of the factors used in the study, with the Midlands scoring highest in business birth rates and second in terms of average disposable income. He saw close to a 14% business birthrate in 5 years, the highest on the table by any means.
Second, Bolton had the highest disposable income of any city, it also had a high score for business births, with a positive 4%. While it doesn’t have as many “recession-proof” businesses as other cities on the table, its overall score took it to second place.
The top five cities, showing some of the factors used to rank them.
Although Bolton’s entrepreneurial birthrate was much lower than Leicester’s, it still maintained a higher survival rate than the overall winner. This means that while fewer new businesses emerged over the five years, a greater proportion of those that started managed to stay open than in Leicester. In contrast, Leicester had an impressive birthrate, but with a smaller fraction of those companies still around five years later.
Leeds, Birmingham and Sheffield follow in the table and are among the top five UK cities that could show more resilience in the face of the economic slowdown. Of all the cities used in the study, Birmingham had the lowest business survival rate, but managed to get a spot in the top five due to its high disposable income and number of active businesses.
While those who live in Leicester have reason to be optimistic, none of this guarantees that any city will prosper during these unprecedentedly difficult times.
In addition to energy costs, businesses will also have to deal with less disposable income from existing and potential customers, which can result in a significant decrease in foot traffic across all industries.
Connor Campbell, corporate finance expert at NerdWallet, said:
“There is no doubt that the next five quarters will be difficult for everyone, and while consumers will be highly affected, the knock-on effects of the cost-of-living crisis will see many businesses lose customers through no fault of their own.
While no business or city is truly recession-proof, it’s good news for those who live and work in Leicester, as they seem better equipped to deal with the uncertainty ahead.
However, wherever your city ranks in this study, it’s still a period of great anxiety for business owners, especially those who are struggling to secure funding, or are worried about how rising energy prices will affect their own bills. and those of your customers. income.”
At the bottom of the table, Plymouth were last in the rankings. While it did not rank last in any of the categories, it ranked second in the working business population as well as in disposable income.