Business investment surges outside London in 2018, despite Brexit concerns

Investment in small businesses surged outside London in 2018, driven by soaring numbers of investment deals in the east of England.

Equity finance investment in UK small businesses jumped on the back of a 29% surge in equity investment outside the capital, which rose to £2.8 billion last year.

It brought the total investment in UK small firms to £6.7 billion, following 72% growth over the past two years, despite Brexit concerns, according to the research by the British Business Bank.

British Business Bank’s annual Small Business Equity Tracker revealed a continuing growth trend across the UK, buoyed by an increasing number of deals in the tech sector.

Investment outside London boomed, with the east of England, North East and West Midlands driving growth, with the total size of investment up 118%, 115% and 81% respectively in each region.

A number of UK regions also saw a significant increase in the total number of deals, with a 65% rise in the North East, 15% rise in Yorkshire and Humber, and 11% rise in Wales.

The total number of equity investment deals in the UK declined last year, but the overall value rose amid an increased number of large deals.

Tech businesses drove new equity investments, with new funding in the sector rising 24% to £3 billion in 2018, according to the report.

Keith Morgan, chief executive of the British Business Bank, said: “This is a clear sign of investor confidence in British smaller businesses and their potential for growth.

“We are particularly pleased to see a 29% increase in investment outside of London.

“The British Business Bank continues to work to address regional imbalances in access to investment, to ensure smaller businesses across the UK can access the equity finance they need to fulfil their growth potential.”

Alice Hu Wagner, managing director of strategy economics and business development at the bank, said: “Standing at £4.5 million, the average equity deal size in the UK is up 11% on 2013.

“When combined with high regional growth, this demonstrates that conditions are improving and the UK equity finance market is strong.”