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Jobs growth around Cambridge slows as firms look east to avoid high cost

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Signs that some firms are moving out of Cambridge as high costs make the city a less attractive location for start-ups and traditional businesses beyond ‘knowledge-intensive’ sectors such as IT and life sciences, emerge in a major survey by the University of Cambridge’s Centre of Business Research. It also points to strong growth in East Cambs as suggests similar development can be expected north westwards, along the new A14 corridor towards Huntingdon as the OxCam Arc develops.

Whilst it confirms Cambridge companies enjoyed higher annual growth rates than the national economy and the city’s status as one of the largest concentrations of knowledge intensive employment in Europe the study also points to slowing jobs growth around the city. The Cambridge Cluster Insights dashboard shows the survey of 26,000 firms based within 20 miles of Cambridge showed employment growth eased from 6.2% over a six year period, to 5% pa over three years to 3.7% over a one year period. But the survey also highlighted the strong performance of knowledge intensive sectors -dominated by IT and life sciences and which saw growth in 2019/20 of 5.5% and now accounts for some 28% of corporate employment (68,000 jobs).

Matthew Bullock, chair of Cambridge Ahead’s regional economic planning Group and master emeritus of St Edmund’s College, said: “While no one can yet know how rapidly our economy will bounce back after Covid, the resilience of the Cambridge economy suggests that the city region will be one of the growth beacons in the recovery. We must plan for that as a national project to ensure that the pressures of that growth on local water, transport and housing infrastructures are foreseen, pre-funded and well managed. Only in this way will we be able to sustain the dynamism of the core ecosystem”.

Large companies in the city region have enjoyed the fastest employment growth in the last year at 5.6%. But there are signs that employment created by new business start-ups did not exceed the loss of jobs due to company closures and this imparts a small, but negative note to growth. There are also signs of companies moving out of Cambridge, with initial analysis suggesting this could be due to the rising cost of doing business in the city.

The CBR data shows growth by local authority area, and for the two Greater Cambridge Local Authorities – Cambridge City and South Cambridgeshire – corporate employment growth was 5.9% pa, 4.9% pa and 3.6% pa over the same periods. Recent Office for National Statistics (ONS) BRES data showed similar growth rates for total employment across Greater Cambridge, which is significantly higher than the equivalent UK figures of 1.6% pa, 0.9% pa and 1.1% pa.

A further striking feature of the wider region’s growth is the rapid expansion of the East Cambridgeshire economy, as a result of non-KI companies’ employment growth, with growth of 6%. This reflects the expanding economic impact of the Cambridge economy, but also its higher occupancy costs. Recent data suggests that a similar development can be expected north westwards, along the new A14 corridor towards Huntingdon as the OxCam Arc develops.

Growth in Huntingdonshire, Peterborough and Fenland was slower in 2019/20 than the previous 3 years, but still robust at 2%, even after taking into account the failure of Thomas Cook in Peterborough. Corporate employment growth across Cambridgeshire and Peterborough overall was 5.6% pa, 4.4% pa and 3.2% pa over the 6, 3 and 1 year periods.

The Cambridgeshire and Peterborough Independent Economic Review (CPIER) in 2018 warned that rising business costs in the city could lead to falling growth if left unchecked, due to lack of infrastructure and housing provision; the CPIER also flagged that the impact of exiting the EU was a risk for the internationally mobile Cambridge economy. This latest insight does not provide clear evidence of either materialising but offers a clear warning signal that warrants close national and local attention.

Matthew Bullock, Chair of Cambridge Ahead’s Regional Economic Planning Group and Master Emeritus of St Edmund’s College, Cambridge, said: “While no one can yet know how rapidly our economy will bounce back after Covid, the resilience of the Cambridge economy suggests that the city region will be one of the growth beacons in the recovery. We must plan for that as a national project to ensure that the pressures of that growth on local water, transport and housing infrastructures are foreseen, pre-funded and well managed. Only in this way will we be able to sustain the dynamism of the core ecosystem”.

Cambridge Cluster Insights is commissioned by Cambridge Ahead and sponsored by Arm, Marshall of Cambridge and the Cambridgeshire and Peterborough Combined Authority.

Last Updated ( Monday, 08 March 2021 10:50 )