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Start-ups slower in rural Scotland - FSB calls for action to support rural economies

Business start-up rates are far slower in rural Scotland than in the country’s cities, according to a new analysis by the Federation of Small Businesses (FSB). 

Between 2010 and 2017, the number of registered businesses in Scotland’s urban areas increased from 108,145 to 125,545 – an increase of 16 per cent. Over the same period, enterprises in Scotland’s rural areas increased from 48,225 to 52,270 – an increase of 8 per cent. Since 2011 the population of rural Scotland has grown at a slightly faster rate than the country’s urban areas. 

In a submission to the Scottish Government’s National Council of Rural Advisers, FSB argues that boosting local firms and rural business start-rates should be a key priority for Ministers and the wider public sector. 

Andrew McRae, FSB’s Scotland policy chair, said: “Since the start of this decade, we’ve seen the number of registered Scottish rural firms increase at about half the rate of our cities.  

“This trend should give all of us pause for thought. From Stornoway to Stranraer, smaller businesses are at the heart of local communities and economies. Without a diverse mix of local businesses, driven by a healthy business start-up rate, rural areas will face sluggish growth and struggle to retain and attract working age people.”

In their response, FSB highlights that rural Scottish small-to-medium sized businesses generate around £15bn in turnover while sustaining more than two thirds of rural private sector jobs. 

Andrew McRae said: “In many parts of Scotland, smaller businesses are the local economy. This trend looks set to continue as many big businesses consolidate their operations. 

“Therefore, if we want to develop resilient local economies, then we need to focus on helping our smaller firms thrive. That means ensuring smaller businesses get a fair share of public contracts. It means asking our enterprise support agencies to think local first. At every turn, it means those in charge taking stock of local business opinion.” 

FSB highlights figures from Audit Scotland which show that a third of Scotland’s local roads are in unacceptable condition, with this figure even higher in rural council areas like Argyll & Bute; Dumfries & Galloway; and Comhairle nan Eilean Siar. They also point to figures from Ofcom showing that almost a third (31%) of Scotland’s landmass continues to have no access to 4G services by any operator. Just 3 per cent of the landmass of both England and Northern Ireland have no 4G services from any operator.

Andrew McRae said: “By improving transport and digital infrastructure, our rural areas can become more attractive to business start-ups, as well as families and tourists. This should be a priority for Scottish policymakers in their pursuit of a more productive, innovative economy.”