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Should you move your business to the UK’s second city?

In recent years, many existing businesses and entrepreneurs have realised that it makes sense to relocate outside of London for the best combination of opportunities and cost effectiveness. Many companies of all sizes have moved to cities other than London, attracted by cheaper property, lower labour costs and government incentives. Similarly, it is much easier to get a start-up off the ground when you don’t have to deal with the capital’s rising rents, or the competition in terms of attracting talent or finding a place in the market.

The second city argument

Birmingham has long been officially recognised as the UK’s second city, although Manchester’s attempts to claim this title should also be acknowledged. In Scotland, both Edinburgh and Glasgow also have strong cases to be so named.

It should be recognised though that Birmingham has the highest population and has the highest GDP of any city outside of London. The number of people living in the city is approximately 1,111,300, compared to just 530,300 in the city of Manchester. Nevertheless, both the cities are excellent places to start new businesses. In particular, the relocation of many BBC departments to the 200-acre Media City in Salford, Greater Manchester, has strengthened the Mancunian claim that their city is a creative and digital hub.

Midlands powerhouse

The case for Birmingham is just as strong however. In 2016, the city had the highest number of new start-ups in the UK. It also has the most active business population, and in 2017 was named the most entrepreneurial city outside of London by the government backed Start Up Loans Company. It’s also a great place for business growth and expansion.

Birmingham has a skilled workforce and an excellent employment base, yet living costs and wages are lower than the national average, a fact that makes the city an attractive option for employers. With four universities and three science parks, Birmingham has established itself as a technology centre. Of course, the city also has a strong manufacturing heritage, particularly in the automotive sector.

Retail and resources

Birmingham’s transport links are second to none, with Birmingham Airport, the M42 and direct train services to Euston taking just 90 minutes. This journey time will potentially be halved by the HS2 rail link, expected to come into effect in 2028. However, the HS2 project is currently under review, and businesses should not rely on this being completed on schedule.

The Bullring is one of the country’s leading retail destinations. Home to over 500 brand outlets, the centre attracts a weekly footfall of 750,000 people. The NEC is one of the largest conference centres in the UK, and Birmingham also has excellent and affordable storage solutions for both business and personal users.

The impact of Brexit

In 2018 Birmingham City Council commissioned an independent report into the likely impact of Brexit on Birmingham and the surrounding areas. Although it must be stressed that it is currently impossible to predict how leaving the European Union might adversely impact any part of the UK, especially as the terms of deal or no-deal have yet to be concluded, the report suggested that Birmingham was particularly vulnerable.

Industry in the city is very much export oriented, and 40% of those exports go to EU destinations. Unfavourable tariffs could make this much more difficult. Imports will also be affected, and in the automotive sector 60% of parts are sourced from outside the UK. The loss of EU funding will leave a significant funding gap across several sectors, while shared services, affordable housing and the public sector will also be hit hard.

The case for Manchester

Carolyn Fairbairn, director of the Confederation of British Industry, recently predicted that a no-deal Brexit could see the north-west of England lose £20bn from its economy over the next 15 years. But a report by Manchester City Council argued that the city was in a strong position to weather the storm of Brexit.

Nevertheless, Manchester will also lose out on valuable EU funding, particularly in the area of scientific research, and many sectors rely heavily on skilled EU nationals, including hospitality, higher education and construction. The devaluing of the pound has helped Manchester’s visitor economy but has also put pressure on the cost of imports for industry.

It’s clear that there are pros and cons to relocating to either Birmingham or Manchester after Brexit. The current uncertainty surrounding the HS2 rail project also impacts significantly on the attractiveness of both cities. For better or worse, Brexit will affect the whole of the UK: Birmingham, like Manchester, remains as good a base as anywhere else in Britain. The second city remains open for business.