UK Ranks #2 for Startups in Europe. How Does Scotland Compare?
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Article written by Erin Yurday at NimbleFinsÂ
A recent studyÂ by NimbleFins showed that the United Kingdom ranked #2 in a study of the best countries in Europe for startups. Germany finished first, in part due to stronger economic health and a better business climate than in the UK. Scotland certainly had a hand in the UKâ€™s second place finish, for instance pulling up the UKâ€™s GDP growth estimates.
In order to compare the 50 European countries in the study, NimbleFins analysed data from the World Bank, the World Economic Forum, the OECD and UNESCO to arrive at their rankings, using metrics related to economic health, the cost of doing business, business climate and labour quality.
Strengths and Weaknesses in the UK
The UKâ€™s #2 overall ranking is driven primarily by a strong showing in the Cost of Doing Business category, where they ranked third behind the Czech Republic and Estonia. Lower-than-average costs of living and salary expectations mean that a new company in the UK should benefit from lower expenses than in many other European countries.
A plan for decreasing corporate taxes will only serve to make the UK even more attractive to new startups, from a financial perspective.
The UK was held back by weaker economic health and, perhaps surprisingly, less trust in the justice system than in most other top 12 countries. While educational attainment levels were lower in the UK than many other European countries, the UK ranked 4thout of the top 12 for offering specialized training servicesâ€”enabling startups to help develop their employeesâ€™ skills and individuals to advance their skills in order to apply for new jobs and improve their marketability.
How Scotland Compares: Survival Rates
While most of the data used in the study was not available for Scotland specifically, the Office of National Statistics (ONS) produces other data that lets us see how startups in Scotland fare compared to the rest of the UK.
Using the ONSâ€™s Business Demography study data, we can see that startups in Scotland have slightly higher survival rates after 5 years than the UK average (43.7% vs. 43.2%) and noticeably higher survival rates than those based in London, the startup capital of Europe (43.7% vs. 39.3%).
How Scotland Compares: Startup Births
Around 5% of the UKâ€™s startups are located in Scotland. In 2016, the most recent ONS data available, entrepreneurs began 22,270 new companies in Scotland.
Over the five years between 2012 and 2016 the annual birth rate of Scottish startups rose from 17,385 to 22,270, an increase of 4,885 startups per year representing 28% growth over the five yearsâ€”proving that the Scottish startup scene is active and growing.
On top of this solid growth, the active community of entrepreneurs, support networks and development programmes in Scotland (e.g., The Data Labâ€™s MSc. Placement Programme) surely contributed to Scotland helping the UK achieve the #2 spot for Best Countries in Europe for Startups.