Bristol and Edinburgh are emerging as the unlikely engines of Britain’s innovation economy, accounting for the country’s fastest-growing workforce among tech firms, university spin-outs and patent holders, according to a new study that reveals the persistent funding gap in the so-called Golden Triangle.
The number of employees employed by innovative companies in Bristol increased by 65 per cent between 2019 and 2024, with Edinburgh increasing by 43 per cent over the same period, significantly outperforming Oxford at 40 per cent and Cambridge at 26 per cent, analysis of almost 40,000 companies shows.
The study, carried out by research firm Beauhurst, classifies an “innovative” company as one that is either a spin-out from a university, receives an innovation grant of £100,000 or more, holds a patent or is a technology company that has secured capital investment.
Yet despite the surge in labor in regional centers, capital remains stubbornly concentrated in the Southeast. About 80 percent of venture capital invested in the UK still ends up in London, Oxford or Cambridge, the report said. This figure is likely to reignite the debate over whether Whitehall’s leveling rhetoric matches the reality in the private sector.
Karim Bahou, head of innovation at Sister, the Manchester-based innovation district which commissioned the study, said the work was intended to shed light on the structural reasons for the funding gap that continues to plague regional cities.
Bahou’s analysis found that Manchester itself is punching well above its weight. On a per capita basis, the city is on a par with the capital: there are two innovative companies for every 1,000 inhabitants.
Bahou is now pushing cities outside the Golden Triangle to forge so-called “innovation corridors” between themselves rather than continuing to circle London. The Corridors, established networks connecting regions that routinely collaborate in financing and business building, enable the unimpeded flow of capital, talent and intellectual property across the country.
Scotland’s central belt shows the way. The Edinburgh-Glasgow corridor has already produced 448 partnerships, including 378 investments and 70 research grants, making it the most integrated city-to-city innovation network in the UK.
“Up in Scotland we’re seeing some really strong connections between Glasgow and Edinburgh. This is where we think there’s an opportunity to apply a Scottish model to the rest of the country,” Bahou said.
The report further recommends transferring tax incentives for research and development to regional authorities, establishing dedicated regional investment funds to open up business flows beyond the capital, and developing physical innovation districts (Sister itself is cited as an example) to anchor intellectual property and talent locally.
“We have the Northern Powerhouse Fund and that is great. We should double the use of such funds that focus on specific regions and the strength they bring,” Bahou said. “But investors need to come and see what’s happening up north for themselves. We have some incredible companies here.”
