Cambridge at crossroads despite major KI status in Europe
Cambridge’s status as one of the largest concentrations of knowledge intensive employment in Europe has been confirmed in a new study released via the Cambridge Cluster Insights dashboard by the Centre for Business Research (CBR) at Cambridge University.
But this success comes with a price: The study says there are also indications that startups and non-KI firms are finding conditions in the city less attractive.
Medium term data on the growth of the Cambridge economy, right up to the start of the 2020 Covid lockdown, shows persistently higher annual growth rates than the national economy, particularly amongst knowledge-intensive firms.
The authoritative data details the annual turnover and employment growth of 26,000 companies based within 20 miles of Cambridge measured over six, three and one-year periods.
The CBR calculates that corporate employment growth across the Cambridge city region economy within this 20 mile radius was 6.2 per cent pa, 5 per cent pa, and 3.7 per cent pa over these periods.
While growth in the Cambridgeshire economy overall slowed slightly in the year before Covid appeared, a notable feature of the Cambridge city region economy was the consistently strong performance of the KI sectors, which maintained growth in 2019/20 of 5.5 per cent.
As a result of their resilient buoyancy, the share of employment in these sectors has risen across the last six years to over 28 per cent of corporate employment in the area (68,000 employees).
Another 37,000 people are employed in universities and research institutes in the area, which have also continued to grow steadily, making the area one of the largest concentrations of KI employment in Europe.
Information technology and life sciences are the largest and most dynamic of these KI sectors, and are likely to continue to be so through the Covid lockdown period and beyond.
Large companies in the city region have enjoyed the fastest employment growth in the last year at 5.6 per cent. On the other hand, there are signs that employment created by new business startups 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 is also able to show growth by Local Authority area and for the two Greater Cambridge Local Authorities – Cambridge City and South Cambridgeshire – corporate employment growth was 5.9 per cent pa, 4.9 per cent pa and 3.6 per cent 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 per cent pa, 0.9 per cent pa and 1.1 per cent 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 expansion of six per cent.
This reflects the expanding 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 three years, but still robust at two per cent, even after taking into account the failure of Thomas Cook in Peterborough.
Corporate employment growth across Cambridgeshire and Peterborough overall was 5.6 per cent pa, 4.4 per cent pa and 3.2 per cent pa over the six, three and one-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.
Kirsty Gill, chief people officer at Arm, commented: “As Cambridge continues to be home to many thriving businesses, including Arm, ensuring a sustainable and high quality of life for the people these businesses attract to the region is critical.
“Cambridge Ahead’s focus on providing insights into the growth of the city’s economy is crucial, as we continue to prioritise the wellbeing of our people and support the continued success of Cambridge as a hub for talent.”