Business Growth Index -
Redefining business growth: Insights from business density
According to the new Business Growth Index, Cardiff led the UK in 2024 with one new business for every 10 residents, showcasing remarkable entrepreneurial energy amidst a nationwide rise in new companies.
As entrepreneurial activity surged across the UK in 2024, one city's story emerged as noteworthy. Nearly a million new companies were registered nationwide – a 34% rise from the previous year – but Cardiff stood out when we examined the data through the lens of business density. With one new business for every 10 residents, Cardiff leads the country, offering a fascinating perspective on where entrepreneurial energy is most concentrated.
While London continues to dominate in total numbers, Cardiff's density reveals a city punching above its weight. A mix of affordability, strong talent retention, and a compact, connected community has made Cardiff fertile ground for new ventures. This challenges the assumption that business growth must centre around the capital, suggesting smaller cities can play a vital role in shaping the UK's entrepreneurial landscape.

Mapping the density hotspots: Cardiff takes the lead
Our analysis highlights Cardiff as a standout performer, with one new business for every 10 residents. Though dominant in total registrations, London trails with a business density of one per 23 residents due to its much larger population. Other cities, such as Sheffield, Leeds, and Edinburgh, fall even further behind; Sheffield, for example, records just one new business per 59 residents.
Cardiff's success can be attributed to several factors. The city's affordability, particularly in its property market, provides an accessible entry point for entrepreneurs. High graduate retention from Cardiff University ensures a steady supply of skilled professionals, while the vibrant city centre and compact size foster close-knit networks and community ties that support new businesses. These factors combine to create an environment where entrepreneurship flourishes.
Is Cardiff the best city to launch a business in 2025?
Emerging as one of the UK’s strongest business hubs, with one new company formed for every ten people, Cardiff’s appeal sees it rank first in our Business Growth Index.
According to Angela Niering-Wren and Chris Stevens, Senior Commercial Banking experts in our Real Estate Finance and Specialist Trading teams, this is no surprise.
In some cases, the high number of business registrations stem from Companies House being based in Cardiff and firms buying and reselling off-the-shelf registrations. Cardiff's. But this has been the case for many years and would not be the reason for this rise. It is more likely that the unique combination of affordability, connectivity, and economic momentum is undeniably attractive to entrepreneurs and businesses alike. In a post covid world, this is likely a magnet for new businesses.
“In recent meetings, Cardiff has been highlighted as a potential target for property acquisition,” Chris explains. “The property costs in Cardiff are lower compared to Bristol and the Bath area, potentially leading to higher yields due to the lower entry costs. Several of my clients have expressed interest in House in Multiple Occupation (HMO) properties, considering Cardiff's robust student market.”
Angela agrees, saying, “Cardiff University has a strong retention rate of graduates who choose to stay after experiencing the city, creating a high-quality workforce. Its impressive research and development track record, and recent creation of Cardiff Innovation Campus, 17,500 square feet of office space, dedicated to bringing together thinkers and makers in a collaborative environment. Medical sciences, has also been a major driver of growth, with medical research companies siting their operations on the University Hospital of Wales campus Cardiff is attracting talent and innovation.”
“Additionally, a recent Knight Frank report highlights that 65% of Cardiff's population is of working age, further contributing to the city's dynamic and capable workforce.”
Cardiff's other advantages include its infrastructure and a climate conducive to investment. At the same time, removing toll fees on the Severn Bridge has made travel between Cardiff and England more affordable, encouraging more people to live and work in the city.
“The last 5 years has seen the redevelopment of the central bus station creating a significant supply of modern Grade A office space in the newly named Central square take up of this supply has created capacity in the more affordable grade B supply.”
When considering why Cardiff presents a compelling alternative to London as a business destination, Angela says, “The city offers a lower cost of living while maintaining competitive salaries that stretch further in a regional setting. The area also benefits from proactive promotion by Cardiff County Council, which actively attends trade events like MIPIM and UKREiif to highlight Cardiff’s advantages. As the seat of the Welsh Assembly, Cardiff provides businesses with closer access to key decision-makers, reinforcing its status as a dynamic and influential hub on the global stage.”
London's fourth-place ranking reflects both its strengths and challenges
Paul Langham, a highly experienced Senior Commercial Banker who is also in our Specialist Trading Team, says that while London remains a global business hub, high costs and fierce competition make it tough for new businesses to launch and startups to scale there.
“Navigating complex regulations and economic and political uncertainties also add pressure, especially for firms reliant on international trade. Plus, with certain sectors already saturated, carving out a niche is harder than ever. Yet, despite these hurdles, businesses that can adapt, innovate, and differentiate still have a huge opportunity to thrive.”
On breaking into London’s business scene, Paul says, “London is an exciting but demanding place to start a business. Costs, strict regulations and competition can make entry tough, while securing funding and attracting talent in such a competitive market adds further challenges. But it’s important to acknowledge that these challenges are not isolated to London.”
“Economic uncertainty and market saturation in some sectors also create hurdles for new businesses. However, London’s global connectivity, diverse talent pool, and strong infrastructure offer immense opportunities. With the right strategy, resilience, and innovation, entrepreneurs can navigate these barriers and position themselves for long-term success.”
London's 2025 economic strategy emphasises resilience, innovation, and inclusivity. The strategy outlines plans to foster collaboration between businesses and academia, support SMEs, address inequalities to ensure inclusivity and invest in eco-friendly infrastructure and sustainable growth projects. By leveraging its skilled workforce and strategic location, London aims to maintain its global competitiveness while addressing challenges such as high costs and market saturation.
The full ranking
The Business Index Score ranking is calculated by multiplying businesses per capita by 1,000. Source: Companies House.
Location | Business Index Score | Increase in businesses launched 2023 vs 2024 |
---|---|---|
Cardiff | 99 | 4% |
Manchester | 61 | 29% |
Nottingham | 43 | 24% |
London | 43 | 30% |
Belfast | 35 | 59% |
Milton Keynes | 33 | 20% |
Glasgow | 32 | 23% |
Harrow | 31 | 23% |
Birmingham | 30 | 24% |
Leicester | 30 | 32% |
Liverpool | 28 | 26% |
Bristol | 28 | 17% |
Bolton | 27 | 23% |
Norwich | 26 | 18% |
Coventry | 24 | 23% |
Southampton | 23 | 19% |
Edinburgh | 23 | 18% |
Leeds | 18 | 18% |
Sheffield | 17 | 24% |
Conclusion: future insights await
This analysis marks the beginning of our exploration into entrepreneurial activity across the UK using our UK Business Index Tool. By delving deeper into the data, we aim to uncover more intriguing trends and insights. Incorporating perspectives from our bankers, leaders, clients, and external partners will enrich our understanding, blending practical knowledge with diverse viewpoints to interpret these trends in the real world.
About our UK Business Index Tool
Arbuthnot Latham has developed an analytical in-house tool to comprehensively examine Companies House data over the last two decades. This gives us unique insight into business registrations from a geographical, sectoral and demographic point of view, and enables a granular view of activity using city, postcode, gender and age metrics.
Methodology for this report
To create this report we used a proprietary Arbuthnot Latham tool to analyse Companies House data and compare the average population in each city to the number of businesses registered there in 2023 and 2024. The final Business Index Score ranking was calculated by multiplying businesses per capita by 1,000.
Contributors to this report