How Big is the North-South Divide?
Midlands Engine. Northern Powerhouse. Levelling Up. Power Up the North. The last decade has seen a number of initiatives and campaigns designed to redress regional inequalities across the UK.
Following the election of the Labour Party in July 2024, the UK Government began rolling back and, in some cases, rebranding these initiatives. Regardless, the goal remains the same — empowering people and businesses north of the M25.
But how much has actually changed since 2015?
To answer this question, we’ll use the data at our fingertips on the Beauhurst platform and examine the North-South divide by analysing the UK business economy. This includes regional data around high-growth businesses, equity investment, innovation grants awarded, and GVA (gross value added) to the UK economy.
Methodology for high-growth companies
We will compare the total number of active high-growth companies as of 1 January, 2015 to those active as of 10 March, 2025. A company is classified as high-growth if it possesses a Growth Signal on the Beauhurst platform.
These include:
- Equity fundraising
- Debt fundraising
- MBO/MBI
- Accelerator participation
- 10% scaleup
- 20% scaleup
- Acquisition
- IPO
- Inclusion on a recognised high-growth list
High-growth companies by region
Back in 2015, London led the UK with 26.2% of high-growth companies headquartered in the capital. Ten years on, following Brexit and its well-documented impact on jobs and visas, the gap has only widened, with the steady flow of capital and interest from foreign investors outweighing the high cost of operating in the city.
As of March 2025, London now has 31.9% of the share of the UK’s high-growth companies, with almost every other region seeing drops in proportion whilst London has enjoyed a 5.7% rise in high-growth companies.
Meanwhile, the South East’s position remains unchanged as the second-most concentrated region for high-growth companies across the UK. In 2025, the South East is home to 13.7% of companies in the high-growth ecosystem — a beneficiary of the golden triangle of universities in Oxford, Cambridge, and London.
Other regions, with the exception of Northern Ireland (0.1%), have all seen a net negative change in high-growth companies since 2015, though all of these drops remain under 1%. The larger of these drops include Scotland and the West Midlands with 0.9% fewer high-growth companies each.
When the regions are collated, the stark North-South divide becomes more apparent. London and the South — which includes the South East, South West, and East of England — form a combined 60.8%, leaving the Midlands with just 10.6% and the North with 16.6%. Scotland now accounts for 6.3% of companies, Wales equates to 3.5%, and Northern Ireland 2.1%.
Evidently, the divide in the distribution of high-growth companies across the UK still persists — and in some cases, has broadened. However, this is just one simplistic means of analysing the North-South divide. For a deeper analysis, let’s now turn to equity investment and grant funding.
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Methodology for fundraising and grants
Next, we’ll compare the number and value of both equity fundraisings and grants across two periods.
Firstly, from 1st January 2011* up to 1st January 2015 and then between 1st January 2015 and 10th March 2025, when this data was compiled.
This ensures that we account for both structural shifts in high-growth business distribution and long-term trends in financial support across the UK.
*Beauhurst data is comprehensive from 2011 onwards. Pre-2011 data is limited to selected events.
Equity fundraising distribution by region
Here are some of the key takeaways:
London’s dominance has intensified
Similar to the volume of high-growth companies, London saw a dramatic increase in both the number and value of fundraisings, growing from 10,239 deals (£29.7b) in the period up to 2015 to 29,670 deals (£99.9b) between 2015 and 2025.
Its share of total deals also rose significantly from 41.5% to 49%, highlighting an increasing concentration of investment in the capital.
Growth in the East of England and Midlands
The East of England experienced substantial growth, with investment value surging from £5.03b in 2015 to £13b in 2025, though its share of UK deals slightly declined from 7.9% to 7.2%.
The East Midlands also saw a notable rise in total fundraisings, more than doubling in number and increasing investment value from £914m to £1.49b.
The North-South divide persists
Despite increased deal activity, some Northern regions have struggled to keep pace with the South. The North East, for example, saw the number of fundraising events rise from 632 to 1,165 and investment value nearly triple from £788m to £2.31b. However, its share of total UK deals declined from 2.6% to 1.9%, suggesting slower relative growth compared to the South.
Net investment growth across the UK
While most regions saw an increase in investment volume, London accounts for the lion’s share of this growth, with a net increase of £70.2b.
In contrast, regions like the North East and East Midlands saw net increases of £1.52b and £576m, respectively — substantial but comparatively small in scale.
The UK has one of the most imbalanced economies in Europe. Although attempts to ‘Level Up’ parts of the North and Midlands have been welcome, real change cannot be achieved through government intervention alone.
It is encouraging to see in this report that businesses and funds are stepping up to the mark by ramping up investment in many left behind communities - especially in my native North East”
Average value of fundraisings
One area where we see stronger signs of growth north of London and the South is when we analyse the average value of fundraisings. Here, the North West and the West Midlands come out more favourably, with £2.8m and £2.3m respectively — only London (£3.3m) and the East of England (£2.9m) have a higher average value of deals.
Based on our research into the UK’s unicorn companies, this is not a surprise. Both regions have produced high-value companies in their regions, notably sportswear companies Castore (Manchester) and GymShark (Solihull), which both achieved their $1b valuation in recent years.
Grant distribution by region
Grant funding plays a crucial role in supporting innovation, research, and business growth across the UK. However, the latest data reveals significant disparities in how grants are distributed, reinforcing the regional investment divide.
London’s lead grows
The UK has seen a broader growth in grants awarded, though London has seen a particularly sharp rise in grant funding, with its share increasing from 16.4% in 2015 to 23.0% in 2025.
This is set in sharp contrast to the rest of the UK, where the proportion of grants awarded has remained the same, or decreased. The total value of grants awarded in the capital has also tripled over the decade, from £507m to £1.52b.
This shift suggests that while funding is available across the UK, a disproportionate amount continues to flow into the capital.
The North East’s funding slowdown
Historically, the North East stood out for receiving large but fewer grants, with an average grant size of £865k in 2015 — one of the highest in the UK. However, despite a slight increase in total funding to £602m in 2025, its share of UK grants has declined from 5.3% to 4.3%.
This suggests that while the region still benefits from high-value grants, its overall funding allocation has been deprioritised.
The East Midlands and East of England gain ground
While London continues to lead, other regions have seen substantial growth in grant funding.
The East of England has more than doubled its grant funding, from £249m in 2015 to £586m in 2025, with a steady increase in average grant size (£223k to £266k).
Meanwhile, the East Midlands has also seen a rise, with grant funding growing from £162m to £272m. This indicates stronger support for businesses outside of the capital.
Scotland doubles its grant numbers, but…
Whilst Scotland has more than doubled its number of grants awarded from 1,315 pre-2015 to 2,634 between 2015 and 2025. However, the average grant value has dropped from £600k to £425k.
The reduced average value suggests that businesses and research institutions are receiving smaller individual grants, which could potentially limit their ability to scale or undertake ambitious projects.
A widening divide?
While grant funding has increased across all regions, distribution remains uneven. London’s accelerated growth in grant funding suggests that investment continues to be concentrated in a few key areas, rather than acting as a tool to rebalance regional disparities.
Although some regions have benefited from increased funding, devolved nations (Wales, Scotland, and Northern Ireland) remain at the lower end of the funding spectrum, reinforcing concerns that the gap between the South and the rest of the UK is not narrowing at the pace required.
Grant funding is an essential driver of innovation and business development, but its uneven distribution raises questions about regional investment priorities. While London and the East of England continue to attract the largest sums, other regions — particularly the North East and devolved nations — risk falling further behind unless targeted interventions are made.
Without a shift in how grants are allocated, the North-South divide in investment will likely persist, leaving businesses outside the capital at a disadvantage in securing vital public funding.
Looking to the future
Despite years of policy initiatives aimed at addressing regional inequality, the data tells a familiar story: the North-South divide persists, and in some areas has widened.
London’s dominance in high-growth companies, equity investment, and grant funding has consolidated over the past decade, with the capital securing an even larger share of total investment. Meanwhile, regions across the Midlands, North, and devolved nations have struggled to keep pace, with many seeing their relative share of high-growth businesses and funding decline in comparison.
Still, there are positive signs. The North West and West Midlands have both seen higher-value equity fundraisings, demonstrating that these regions are capable of producing unicorn companies and attracting larger deals. Likewise, the East of England and East Midlands have made gains in grant funding, showing that investment isn’t solely concentrated in the capital.
However, the overarching trend is that investment, innovation, and business growth remain disproportionately concentrated in London and the South East. The gradual increase in funding to some northern regions has not been enough to counterbalance the overwhelming flow of capital toward the South.
If the UK is to address regional economic rebalancing, there needs to be a more strategic approach to investment and funding distribution. Without this, the North-South divide will remain a defining feature of the UK economy for years to come.
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