Start-up slowdown is a cloud in Cambridge Ahead regional data

Cambridge’s unique ability to contribute to the UK economy could be at risk because of a start-up slowdown, according to new evidence published by Cambridge Ahead.

The data reveals that, while Cambridge is growing faster than the national economy, the prerequisite for its success – a healthy supply of start-ups – has slowed up markedly.

The new report was produced for Cambridge Ahead by Andy Cosh and Giorgio Caselli, assistant directors at the Centre for Business Research at Cambridge Judge Business School.

In many respects, it confirms that Cambridge has been enjoying an unprecedented period of growth. The research – which appears on Cambridge Ahead’s Cambridge Cluster Insights dashboard – shows overall corporate employment grew by 4.5 per cent pa, driven by a buoyant Knowledge Intensive (KI) based economy. These KI sectors have propelled growth at 6.2 per cent per year over the six-year period without hampering the growth of non-KI sectors, which have logged in at 3 per cent growth per year.

However the faltering national economy over the past year has had an impact even in Cambridge by slowing growth – KI employment grew by only 4.1 per cent in 2023-24.

Cambridge Ahead is claiming its data is even more accurate than the ONS (Office of National Statistics) data used by Chancellor Rachel Reeves to make her spending – and cutting – calculations.

The difference between the official data and the Cambridge Ahead figures is explained in part by the fact that the ONS data is based on a survey, with all the unreliability that brings. The local data is only focused on the corporate economy (e.g. does not measure public sector employment) but is taken from Companies House, quality assured, checked with companies and then published.

Cambridge Ahead, along with sponsors Arm, Marshall of Cambridge, Mills & Reeve, the Greater Cambridge Partnership and the Cambridgeshire and Peterborough Combined Authority, have all been supporting this survey.

For that reason, its tracking of start-up activity is even more significant. The CBR data for Greater Cambridge (Cambridge local authority district and South Cambridgeshire local authority district) shows the number of business births in Greater Cambridge was 1,205 in 2017-18 (3,078 employees) and went down to 559 in 2023-24 (1,403 employees).

There are multiple reasons for this slowdown, says Cambridge Ahead’s Dan Thorp.

“Cambridge is the most intense science and technology cluster in the world – it has a vast and unique contribution to make to the Government’s growth mission,” he says. “That is why it is so important to have gold-standard data showing what is really happening in the Cambridge economy, and across the wider Cambridgeshire and Peterborough area.

“This data is sending an important message – that good growth that benefits all is not guaranteed. Start-ups and spin-outs have fuelled Cambridge’s growth since the 1960s, scaling into major UK success stories and creating a cluster with major international pull and impact.

“The latest data suggests that the fuel of homegrown growth has been thinning, and this reinforces the urgent need to deliver infrastructure and innovation assets that keep the Cambridge Phenomenon firing on all cylinders for the good of the UK.”

Following publication of the data, Cambridge Ahead has submitted a set of growth recommendations to the Treasury.

The document includes a joint statement from Cambridge ecosystem partners.

“To maximise the potential benefits of future Cambridge innovations – the ‘software’ breakthroughs – will mean investing in the ‘hardware’ of the city. Government has clearly recognised in recent policy announcements that investment in infrastructure in Cambridge is a direct investment in economic growth,” they say.

But the start-up slowdown isn’t just a question of infrastructure, and Mr Thorp accepts that other factors are in play. These could include a slowdown in students willing and able to start a business, visa issues – the legacy of Brexit continues to negatively impact the UK economy – plus a global investment downturn, alongside local transport and housing issues.

County mayor Dr Nik Johnson said: “It’s encouraging to see strong employment growth in many areas, but we must also recognise the issues that need urgent attention.”

Cllr Elisa Meschini, chair of the Greater Cambridge Partnership, said: “The research tells us we cannot afford to be complacent and believe our area will always prosper.”