Manchester has been named the fastest-growing technology hub outside London, with a new report showing that start-up formation in the North West has outpaced the capital for the first time in a decade. The findings mark a significant shift in the UK’s digital landscape, traditionally dominated by London and the South East.
The annual Tech Nation report, which tracks the performance of the UK’s digital economy, found that Manchester recorded a 23% increase in new tech company formations over the past year, compared with 18% in London. The city’s tech ecosystem now supports more than 8,000 digital businesses and employs over 60,000 people in the sector.
What’s driving Manchester’s tech boom?
Analysts point to several factors behind Manchester’s emergence as a tech powerhouse. The city’s universities, including the University of Manchester and Manchester Metropolitan University, have ramped up their support for spin-out companies and entrepreneurship programmes. Meanwhile, relatively affordable office space and living costs have attracted founders priced out of London.
Local government initiatives have also played a crucial role. Manchester City Council’s digital strategy, launched in 2022, has provided funding and support for tech incubators, while the Northern Powerhouse investment programme has directed significant resources towards the region’s digital infrastructure.
— Tech Nation CEO on the report findings
The report highlights several success stories from the region, including e-commerce platforms, fintech startups, and health technology companies that have secured substantial venture capital funding. Last year alone, Manchester-based tech firms raised £450m in investment, a record for the city.
Implications for the UK tech sector
Industry experts say Manchester’s growth could signal a broader rebalancing of the UK’s tech economy. With several other northern cities, including Leeds, Sheffield and Newcastle, also showing strong growth in digital company formation, there are hopes that the North could become a significant counterweight to London’s dominance.
However, challenges remain. The report notes that while Manchester is excelling at company formation, it still lags behind London in terms of late-stage funding and exits. There are also concerns about talent retention, with many companies still struggling to compete with London salaries for senior technical roles.
Looking ahead, city leaders are optimistic. Manchester’s mayor has announced plans to expand digital skills training programmes and invest in additional tech infrastructure, with the goal of supporting 100,000 tech jobs in the city by 2030.
The report’s authors suggest that Manchester’s success could provide a blueprint for other regional cities looking to develop their own tech ecosystems, potentially reducing the UK’s over-reliance on London as a single centre for digital innovation.
