By Andrew Mitchell, chief executive of North East Finance
Last year the UK economy grew at its fastest pace since 2007. The 2.6% rise comfortably outstripped the 1.7% increase in 2013 and meant that the UK out-performed the majority of EU countries.
Several factors have driven this growth, namely a strong performance by the service sector which expanded by a creditable 0.8% in the last three months of 2014. Venture capital and private equity have also oiled the wheels of the economic recovery, with several judicious investments creating wealth and jobs in the North East of the country.
Recently the Finance for Business North East Growth Fund invested a six-figure sum of money in Newcastle recruitment firm Exclusive, which will use the cash as working capital and to create local jobs. Meanwhile, the £250,000 that communications wholesaler UC&C received from the Accelerator Fund will be used to scale up the company’s Sunderland office.
There have been many other examples of judicious investments in the region – far too many to mention here. But generally levels of investment are on the up.
Venture capitalists across the region have lauded the last twelve months as a positive year, with pages of the media littered with notable small to mid-market investments in local firms. Northstar Ventures, which manages the Finance for Business Accelerator and Proof of Concept Funds, has highlighted strong growth and investment opportunities in the digital and IT sector.
Growth Fund manager NEL said greater economic stability had led to a rise in the number of deals completed, with investment capital playing a major role in boosting employment, wealth creation and supply chain spending. Meanwhile, Rivers Capital hailed 2014 as one of its busiest years in terms of the number of investments from its Finance for Business North East Angel Fund.
This mood of optimism is set to continue well into 2015, especially with VCs showing appetite for investment and a raft of data highlighting the continuing strength of the UK economy.
Analysis by insolvency expert R3 showed that several North East industries were out-performing their national counterparts – with the local restaurant, transport and retail sectors having the lowest proportion of companies with a higher than normal risk of insolvency. Separate figures from the Office for National Statistics showed that the UK had a record number of start-ups last year, with 581,173 new businesses registered with Companies House – a rate of more than one every minute.
These figures, combined with healthy investment levels in the VC market, suggest that 2015 will be another year of growth for the regional and national economy. Businesses and policymakers will say cheers to that.