Huge areas of the North East have been identified as places where new businesses and investments are expected to grow rapidly.

More than two fifths of local areas in the North East (42%), more than double the 19% average seen across England, Scotland and Wales, have been identified as Business Creation areas – places which share an anticipated high rate of new business and investment growth.

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The new findings come from the latest figures from KPMG UK and the University of Nottingham in the Local Business Pulse Index, offering direction to businesses and local government leaders on the type of investment needed in their local areas.

The report used seven groups to characterise potential growth:

Business Creation group (Areas in with the highest start-up rates, combined with high expectations on investment growth).

  • Hartlepool, Middlesbrough, Redcar and Cleveland, South Tyneside and Sunderland

High Investment group (Areas with high expectations of growth in business investment, and firms facilitating flexible working with new digital infrastructure.

  • County Durham, Gateshead and Stockton-on-Tees

Sales Growth group (Areas with strong sales forecasts, combined with strong expectations on employment growth as firms expand to meet demand.)

  • Darlington and Newcastle upon Tyne

Employment Growth group (Areas with high expected growth in future hirings combined with strong performance in new job openings.)

  • North Tyneside

Consumption Growth group (Areas with high household credit scores and a consumer and leisure-focused economy.)

  • Northumberland

High Productivity group (Areas with leading productivity hotspots with the highest rates of hybrid working.)


Research and Innovation group (Areas with the strongest growth in venture capital investment and R&D expenditure).


Ian Beaumont, Office Senior Partner at KPMG in the North East, said: “The North East is witnessing a surge in start-ups and investment opportunities, positioning the region as a crucial player in the Business Creation group.

“This is true of Tees Valley, where injected investment in freeports, carbon capture and its new Treasury Campus are bolstering economic opportunities in the region, in turn sparking a high level of entrepreneurial activity and innovation.

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Notably, our largest city in Newcastle upon Tyne is thriving in the Sales Growth cluster, with local businesses generating strong sales and revenues, resulting in high demand for new talent.

“However, the lack of Research and Innovation areas may be contributing to the absence of High Productivity areas, as the region may not be offering a conducive enough environment to foster transferable knowledge and skills.