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Local Business (UKSPF)

Data about Local Business covers information about the business landscape in the North East, including business births and deaths rates, scale-ups, high-growth firms, sectoral analysis, the job market, international trade, and innovation.

Small private sector

The North East LEP has a low number of businesses per head

Low business births rate

and deaths rates limits the potential for private sector growth


Increased goods exports

in Q4 of 2021, but overall exports in 2021 were below 2019 levels

High vacancy levels

North East businesses are finding it difficult to recruit staff

High rates of innovation

but low levels of R&D spend and patents granted in the North East

About this investment theme

The focus for this investment theme is to:

  • Create jobs and boost community cohesion, through investments that build on existing industries and institutions, and range from support for starting businesses to visible improvements to local retail, hospitality, and leisure sector facilities.
  • Promote networking and collaboration through interventions that bring together businesses and partners within and across sectors to share knowledge, expertise and resources, and stimulate innovation and growth.
  • Increase private sector investment in growth-enhancing activities, through targeted support for small and medium-sized businesses to undertake new-to-firm innovation, adopt productivity-enhancing (energy efficient and low carbon) technologies, and start or grow their exports.

Business base

The North East LEP has a low number of businesses per head reflecting the small size of the private sector in the region. Over 99% of private sector enterprises in the North East LEP are SMEs (a similar share to nationally), and the North East has more sole proprietors than elsewhere in the UK.

Business births and deaths

The North East LEP area has consistently low business births and deaths rates, limiting the for potential private sector growth. Newcastle, Sunderland and Gateshead have the highest business birth rates in the LEP, while the other authorities are below the LEP average. The North East LEP has the lowest business birth rate within the Core Cities.


Scale-up rates for new and existing enterprises in the North East are relatively similar to most of the other Core Cities.

Business start ups in 2015 (turnover <£500k in 2015) that survived to 2018 and increased turnover to £1 million plus (%)

Businesses with 1-2m turnover in 2015 that grew to 3m+ turnover by 2018 (%)

High-growth firms

High growth rates in the North East LEP are comparable to many of the Core Cities, with high growth firms being most common in Newcastle, Sunderland, Gateshead and North Tyneside. The North East LEP has also been adding new scale-ups at a quicker rate than the rest of the Core Cities since 2013.

Sectoral analysis

The North East LEP has identified five areas of strategic importance where the North East has a competitive advantage and there is significant potential for future regional growth. These five areas are advanced manufacturing, digital tech, energy, health and life sciences and knowledge intensive business services (KIBS). Employment in the areas of strategic importance in distributed across the North East LEP, with local clusters in all authorities. All local authorities in the North East LEP have a specialisation in at least one of the five areas of strategic importance.

Durham has the most employments in advanced manufacturing, whilst Sunderland the most in motor vehicles manufacturing. Pharmaceutical manufacturing is concentrated in Durham and Northumberland, with MedTech in Sunderland and Newcastle.

Sunderland has the most employments in energy, most of which are in gas and electricity production and trade. Newcastle has the most employments in software development and computing, while North Tyneside has more in digital telecoms. Knowledge intensive business services are concentrated in Newcastle, with large financial, software and legal subsectors 


North East goods exports increased by 5% in Q4 2021, but exports for 2021 overall were 12% below exports in 2019. Relative to 2014, North East export levels are lower than all comparator regions. Exporters are distributed across the North East LEP, with ports and other infrastructure providing connections to international markets.


Road vehicles exports have seen a 42% decrease since Covid-19. Other commodities have grown by 2%. Exports to Germany have seen the largest increase since 2019, and Germany is now the North East’s largest market. Service exports from the North East have improved recently, but to the EU fell in 2019, following a national trend. 

Recruitment and jobs

Relative to before Covid-19 levels of job adverts in the North East have increased more quickly than in England. North East businesses are finding it more difficult to fill vacancies due to low application numbers and a lack of qualified applicants.

The North East region has a low share of ‘better jobs’ and degree educated workers across all sectors, although the region was seeing strong growth in more and better jobs until the onset of Covid-19. Prior to Covid-19 employment in the North East LEP was projected to increase by 15,000 from 2017 to 2027, with the largest increases projected to be in Health and social work; professional services; support services and information technology.


The North East LEP has a relatviely high proportion of innovation actvie businesses. 42% of North East LEP businesses were innovation active in 2016-2018, a higher share than those in England (38%). 

In contrast overall R&D spend in the North East region per head is -£386 lower than in England excluding London. R&D spend has grown more quickly in the North East region than England excluding London since 2014 (35% vs 27%), but it fell 5% between 2018 and 2019.

The North East also has a lower number of patents applied for, published and granted than England excluding London. 31 applications were granted per million adults compared to 83 in England excluding London in 2020.


Evidence review on 'what works'

As part of the development of regional UKSPF evidence base, an evidence review was completed, compiling the below list of links to policy evaluations and evidence reviews aligned with the UKSPF investment themes. This summary and analysis can be found here.