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Bristol and Edinburgh are emerging as the unlikely engines of Britain’s innovation economy, posting the country’s fastest-growing workforces among technology firms, university spin-outs and patent holders, according to fresh research that lays bare the persistent funding gap with the so-called golden triangle.
Headcount at innovative companies in Bristol jumped 65 per cent between 2019 and 2024, with Edinburgh up 43 per cent over the same period, comfortably outpacing Oxford on 40 per cent and Cambridge on 26 per cent, the analysis of nearly 40,000 businesses reveals.
The study, conducted by the research firm Beauhurst, classifies an “innovative” company as one that is either a university spin-out, the recipient of an innovation grant of £100,000 or more, the holder of a patent, or a technology business that has secured equity investment.
Yet despite the workforce surge in regional hubs, capital remains stubbornly concentrated in the south-east. Some 80 per cent of venture capital invested in the UK still finds its way to London, Oxford or Cambridge, the report finds, a figure that is likely to reignite debate over whether Whitehall’s levelling-up rhetoric is being matched by private-sector reality.
Karim Bahou, head of innovation at Sister, the Manchester-based innovation district that commissioned the study, said the work was designed to shed light on the structural reasons behind the funding gap that continues to dog regional cities.
Manchester itself, Bahou’s analysis found, is punching well above its weight. On a per-capita basis the city is on a par with the capital, with each boasting two innovative companies for every 1,000 residents.
Bahou is now urging cities outside the golden triangle to forge so-called “innovation corridors” between themselves rather than continuing to orbit London. The corridors, established networks linking regions that routinely collaborate on funding and company-building, allow capital, talent and intellectual property to flow more freely across the country.
Scotland’s central belt is leading the way. The Edinburgh-Glasgow corridor has already racked up 448 partnerships, including 378 investments and 70 research grants, making it the most deeply integrated city-to-city innovation network in the UK.
“Up in Scotland we see some really strong links between Glasgow and Edinburgh. This is where we think there is an opportunity to apply a Scottish model to the rest of the country,” Bahou said.
The report goes on to recommend devolving research and development tax incentives to regional authorities, establishing dedicated regional investment funds to unlock deal flow beyond the capital, and developing physical innovation districts, Sister itself is cited as an example, to keep intellectual property and talent rooted locally.
“We’ve got the Northern Powerhouse Fund, and that’s brilliant. We should be doubling down on funds like that, that focus on specific regions and the strength they bring,” Bahou said. “But investors themselves need to come and see what’s happening up in the north, we’ve got some incredible businesses here.”
