UK Coastal Economies: Mapping High-Growth Businesses

Think of Britain and your mind will probably conjure up images of the White Cliffs of Dover, Brighton Rock or even the Blackpool Tower. Coastal landscapes and communities are fundamental to our national character. However, despite being an island nation, the “coast” is one of the most overlooked parts of the UK economy.

It is also one of extremes. At one end of the spectrum we see bustling port cities like Bristol, Newcastle and Liverpool which are key drivers of regional economic growth. On the other, coastal communities are often statistically likely to have more crime, poorer health outcomes and higher levels of income deprivation than their inland neighbours. There is also a striking disparity in economic outcomes across coastal communities, and the data behind it is more complex than it first appears.

Last month, the Beauhurst Insights team published a report with Ashfords looking at this topic. Today we wanted to dig a little deeper into the data to understand what’s actually driving that gap and why some coastal communities pull ahead while others fall further behind.

Equity investment and the coastal funding gap

A good place to start is looking at equity investment. Rather than simply counting deals (which skews any analysis towards London), we developed a Propensity to Receive Equity (PTRE) score for every firm based on its sector and age across Britain’s Travel To Work (TTW) areas. This gives us a sector-adjusted baseline: a ratio of actual investment relative to expected investment. A score of 1.0 means a locality is getting exactly the same equity its economic composition predicts.

Here is where things get interesting. When we apply this sectoral adjustment, London’s advantage barely moves. The adjusted ratio correlates 98% with the raw, unadjusted measure. In other words, London’s equity dominance is not explained by having more investible industries. It is happening instead within sectors. London’s software companies raise more than Sunderland’s. London’s biotechs raise more than Hull’s. Holding firm characteristics constant, a company in a ‘Coastal & Peripheral’ TTW area is 62% less likely to ever receive equity than a comparable London firm.

Now look at where ‘Coastal & Peripheral’ sits in Figure 1. Every other area type clusters in a recognisable range. Post-Industrial sits low. Capital & Golden Triangle bunches tightly at the top. Coastal & Peripheral sprawls from 0.3 to beyond 2.0 (the widest distribution of any category in the analysis). For example, Falmouth ranks first nationally in terms of PTRE score, yet Folkestone & Dover, Barrow-in-Furness and Blackpool both sit in the bottom ten.

Why does the equity gap persist even after adjusting for the sector? Research by economists Nick Wilson and Marek Kacer points to what they call “intermediation machinery” – the ecosystem of angel investors, warm introductions and visible past successes that convert viable companies into funded ones. TLDR: The bottleneck isn’t capital per se, but rather it’s the infrastructure that turns capital into deals. In places where that machinery is thin, even strong companies pay a higher trust premium.

Chris Dyson, head of the technology sector at Ashfords, said this reflects what they see on the ground: “Strong ecosystems are critical to unlocking growth. It is not just about access to capital, but having the investors, dealmakers and intermediaries in place to connect businesses with funding. Just as important is the ‘softer’ infrastructure both within a region and connecting regions, including networks, shared experience and visibility, which helps turn potential into investment.”

The port premium and coastal high-growth

While Figure 1 shows the equity access problem across coastal Britain, it’s only part of the story. Figure 2 maps coastal localities by ten-year median asset growth against five-year employment growth. What you’d expect from a coherent economic category is a rough cluster, but what you actually get is a sprawl.

Cardiff, Plymouth, Worthing and Rochester sit in the top-right quadrant, growing on both measures. But look at the under performers and each has a completely different problem. Sunderland is generating jobs without building the business base to sustain them. Edinburgh has the assets but is shedding employment, driven by a decade of contraction in Scottish financial services. Aberdeen is declining on assets entirely, reflecting structural damage from the UK’s retreat from North Sea oil. Figure 2 tells the same story as Figure 1: coastal Britain isn’t one economy. It’s many – each with its own structural problems and its own remedies.

The one consistent pattern the data does show is a port premium. 42% of coastal localities with a major port are classed as high-growth, against just 19% of non-port localities. Ports pull in logistics, energy, manufacturing and professional services in a way few other coastal assets can match.

But Southampton shows the limits of that story to some extent. Despite hosting one of Europe’s busiest container ports, the city records weak growth on both measures with rising unemployment running against the wider South East trend. Ports raise your odds significantly, but they’re not sufficient on their own. The drivers of coastal outperformance, as Falmouth’s top ranking illustrates, are more varied than infrastructure alone.

What the data reveals about coastal Britain

The Beauhurst data is ultimately optimistic about coastal Britain. As outlined in our Ashfords report, coastal investment has quadrupled since 2012. Technology is the fastest-growing sector by company count. Younger, scaled businesses (rather than micro-enterprises) are doing the heavy lifting in the strongest areas.

But those headline numbers are doing a lot of averaging across a category that doesn’t lend itself to averages. Both Figures 1 and 2 underscore the dichotomy between Falmouth and Blackpool and the data starts to show why. The communities pulling ahead share identifiable conditions: investment infrastructure, scaled businesses, and sector concentration. The Beauhurst data shows the right conditions can produce genuine growth, even in unexpected places.

Want to discuss the data? Drop me a message: callum.newton@beauhurst.com