- Cambridge Ahead publishes gold-standard data for the Cambridge economy.
- Businesses in Greater Cambridge grew employment by 4.5% p.a. over the six years 2018-24, according to the new research.
- Experts show growth is underestimated by the ONS – although official data also shows the city region outperforms the national economy
- There has been a concerning decline in the ‘birth rate’ of new companies (more than halving over the last six years). • These figures show that previous calls for the need for investment in Cambridge were well founded, and Cambridge Ahead’s 2025 Spending Review submission recommends targeted infrastructure and innovation investments for a growth boost that will benefit the UK.
- Full data report, Spending Review submission and interviews available on request
Cambridge’s economy – central to the Chancellor’s growth mission – has grown rapidly, has strength in depth in key Industrial Strategy sectors, and outpaces the national economy, according to new gold-standard data looking over the last six years.
The Cambridge Cluster Insights research shows overall corporate employment grew by 4.5% pa, driven by a buoyant Knowledge Intensive (KI) economy.
The findings, however, show that the growth in homegrown start-ups and spinouts is slowing, with the data showing the ‘birth rate’ of new companies more than halving over the last six years.
The data comes just a few weeks after the city region’s role in economic growth was spelt out in the Chancellor’s recent Further Faster speech, which highlighted the Ox-Cam Growth Corridor.
Official figures show the national economy grew 0.9% p.a. over the period. But those figures, experts argue, underestimate growth in the Cambridge city region economy putting it at 1.5%.
The difference between the official data and the Cambridge Ahead figures is explained in part by the fact that the ONS data is based on a survey, with all the unreliability that brings. The local data is only focused on the corporate economy (e.g. does not measure public sector employment) but is taken from Companies House, quality assured, checked with companies and then published.
Cambridge Ahead warns that the start-up slowdown is in part caused by an infrastructure gap and is calling for targeted investment in physical and social infrastructure to support the next phase of sustainable and inclusive growth in Cambridge – to help ensure its continued significant financial contribution back to the UK economy.
Cambridge Cluster Insights research shows:
- Business in Cambridge has grown rapidly and far faster than the national economy. The Greater Cambridge corporate economy has grown employment by 4.5% p.a. over the six years 2018-24.
- Knowledge intensive (KI) sectors have driven that growth (at 6.2% p.a. over the six year period) but have not appeared to hamper at all the growth of non-KI sectors (at 3.0% p.a.).
- The faltering national economy over the past year has had an impact even in Cambridge by slowing growth – KI employment grew by only 4.1% in 2023-24 compared with 6.2% p.a. over the six year period.
- There has been a concerning decline in the birth rate of new companies (more than halving over the last six years) – which is particularly concerning as these new companies in KI sectors tend to generate fast subsequent employment growth.
- The volatility and under-reporting of ONS data continues to concern the researchers given its significant role for policymakers. Over the last six years the ONS captured employment growth for Greater Cambridge of 1.5% p.a.
The research, produced by Andy Cosh and Giorgio Caselli at the Centre for Business Research at Cambridge University, is the centrepiece of Cambridge Ahead’s monitoring of the local economy and is being fed into local civic and national Government leadership.
Cambridge Ahead has submitted a set of recommendations to Government in its Spending Review submission:
- HMT should provide the necessary funding and support to deliver planned transport infrastructure, such as the Cambridge South East Transport (CSET) scheme that will directly enable growth in the Life Sciences cluster in Cambridge as early as possible.
- Strong commitments to the package of measures within the Joint Statement on Addressing Water Scarcity in Cambridge should be made by Government.
- The New Towns Taskforce should work with local partners to assess the best location for a new town location serving the functional economic area of Cambridge, harnessing the connectivity that will be provided by delivery of East West Rail in full to Cambridge.
- Support is needed for the delivery of healthcare infrastructure, which has not kept pace with Cambridge’s rapid population growth.
- This innovation ecosystem needs to be nurtured to initiate further compelling research, to continue to commercialise ideas, and help new companies grow within the UK, including funding and partnering into the proposed multi-sector National Innovation Hub in Cambridge.
The submission says: “We want to partner with Government to deliver on the three pillars of sustainable growth: infrastructure, innovation capability, and making Cambridge a better and fairer city. To maximise the potential benefits of future Cambridge innovations - the ‘software’ breakthroughs - will mean investing in the ‘hardware’ of the city.”
Dan Thorp, CEO of Cambridge Ahead said:
“Cambridge is the most intense science and technology cluster in the world – it has a vast and unique contribution to make to the Government’s growth mission. That is why it is so important to have gold-standard data showing what is really happening in the Cambridge economy, and across the wider Cambridgeshire and Peterborough area.
“This data is sending an important message – that good growth that benefits all is not guaranteed. Start-ups and spinouts have fuelled Cambridge’s growth since the 1960s, scaling into major UK success stories and creating a cluster with major international pull and impact.
“The latest data suggests that the fuel of homegrown growth has been thinning, and this reinforces the urgent need to deliver infrastructure and innovation assets that keep the Cambridge Phenomenon firing on all cylinders for the good of the UK.”
Cllr Elisa Meschini, chair of the Greater Cambridge Partnership, said:
“The Greater Cambridge economy remains resilient despite the current economic conditions – however the research tells us we cannot afford to be complacent and believe our area will always prosper. The research highlights warning signs which we should heed especially when it comes to the pillars of infrastructure – transport, skills, water and healthcare. To meet these challenges, we must continue to work together across the public and private sector in order to deliver for our residents and communities.”
Dr Nik Johnson, Mayor of Cambridgeshire & Peterborough Combined Authority, said:
"It’s encouraging to see strong employment growth in many areas, but we must also recognise the issues that need urgent attention. From tackling inequalities to investing in our infrastructure, collaboration – both locally and with Government – is key to ensuring our dynamic, innovation-led economy continues to grow in a way that benefits everyone.”
Cambridge Cluster Insights
Cambridge Ahead is home to the Cambridge Cluster Insights, the most accurate and reliable source of data about growth in our region.
The annual data covers the whole of the Cambridgeshire and Peterborough area, is a census of the corporate economy and research institutes, and tracks births and deaths of firms.
It is kindly sponsored by the Cambridgeshire and Peterborough Combined Authority, the Greater Cambridge Partnership, Arm, Marshall of Cambridge and Mills & Reeve. As a dataset it has its own limitations but provides a better and more accurate view than other sources.
