Cambridge economy growing through crosswinds and challenges

There have been - and are - challenges, but the growth of employment in Greater Cambridge far exceeds the performance of the national economy, according to new data from the Centre for Business Research (CBR).

The data shows sustained job growth driven by knowledge intensive (KI) sectors, with high-tech manufacturing and life sciences the fastest growing sectors within the region.

Dan Thorp, chief executive at Cambridge Ahead, said: “The evidence couldn’t be clearer. The Cambridge economy continues to perform exceptionally well, particularly in important future-facing sectors. A star performer over the last year has been the high-tech manufacturing sector, demonstrating Cambridge’s strength in depth across the innovation economy.

“The national spotlight is rightly on Cambridge because of our economic strength. As well as creating new jobs that bring benefits to local communities, our city region has a leading role to play in the resurgence of the UK economy.”

The region’s employment rates saw 5.2 per cent growth in 2022-23, compared to rates of 7.7 per cent in 2021-22 so, while still far exceeding the performance of the national economy, growth is taking place at a slower rate than previously, says the report by the CBR, which is part of the Cambridge Judge Business School hub.

The report, sponsored by a collaboration between the Greater Cambridge Partnership and Cambridge Ahead, links the onset of the recession in the second half of 2023 to the slower rate of growth in Greater Cambridge.

Employment rates grow evenly across the districts – with a five per cent increase in both Cambridge and South Cambridgeshire, which the report states is “remarkable considering the macroeconomic background”.

Cllr Elisa Meschini, chair of the Greater Cambridge Partnership, said: “The continued growth of jobs in Greater Cambridge in the face of economic uncertainty and the lasting impact of Covid and other global events is a clear demonstration of how strong our region is, and just how important our world-leading tech and life science sectors are to our country’s economy.

“However, as the data shows, we cannot be complacent about our continued success. We all benefit from the new jobs and investment in our region. This is why it is vital the government and organisations like the GCP deliver the infrastructure improvements we all need so we can support growth sustainably to make our region a better place to live, work and visit.”

Meanwhile, the growth in life sciences and high-tech sectors is put into context in Make UK’s Q2 2024 Manufacturing Outlook report, which reveals that confidence among manufacturers overall has taken a hit.

“Surprisingly,” the report states, “in this edition only one region reported a relative decline - the East of England. Manufacturers here reported a confidence level of 6.3, a decline of 0.7 points and comparatively the least confident English region – though it remains in positive territory which is testimony to the high levels of confidence observed in all parts of the UK.”

But one thing everyone is agreed on: the recession is over. The UK economy returned to growth in May, with a 0.4 per cent uptick.

“This is further evidence that the economic shocks of the last five years are winding down as businesses get back onto a growth footing,” said a Cambridgeshire Chambers of Commerce report.

This week Azets, which has its Cambridge office on Vision Park, has responded to the June 2024 company insolvency statistics.

Partner at the UK top 10 accountancy and advisory firm, Rob Young, said: “Despite signs of optimism last month, company insolvencies in England and Wales reached 2,361 in June 2024. This represents a significant 16 per cent increase from May 2024 and a 17 per cent rise compared with the same month last year, which should be cause for concern as many businesses close out the first quarter of the financial year.

“Ongoing economic challenges are the primary driver of business failures.”

The Eastern branch of R3 has also reported a steep drop in the number of new businesses set up in East Anglia for the second month.

R3 is the trade association for the UK’s insolvency, restructuring, advisory and turnaround professionals. Its assessment is based on a monthly analysis of regional start-up data from business intelligence provider Creditsafe, which shows there were 6,538 businesses set up in East Anglia in June – a substantial 37.16 per cent decrease compared to the 10,405 new businesses registered in April, prior to the announcement of the General Election. The May figure for the region was similarly low, with only 6,440 start-ups during the month.

There remains a high number of East Anglian companies with late payments on their books – 63,143 in June – and also a growing quantity of debts owed by liquidated firms in the region.

R3 Eastern chair Hayley Watson, a director at McTear Williams & Wood in Cambridge, said: “It’s apparent that entrepreneurs have, understandably, taken a cautious approach over the last couple of months, waiting to see how they may be supported or held back by a change in government.”