London cannot compensate for UK-wide challenges facing entrepreneurs, writes Opinium head of policy James Crouch
London has long been recognised as a global centre for business and innovation. Despite the capital’s many advantages, however, the UK has not ranked among the top 20 global markets for entrepreneurs since 2019. So why is the UK struggling to maintain its reputation as a leading hub for startups and business growth?
The recently released Opinium Global Entrepreneurship Index gives us a clue. The index evaluates 137 countries across five ‘pillars’ that determine the attractiveness of a country for entrepreneurship. Since 2011, the index has highlighted both strengths and weaknesses in the UK’s business landscape. Unfortunately, despite London’s key advantages, systemic challenges continue to hold the UK back, preventing it from reclaiming a spot among the world’s best markets for entrepreneurs.
The UK’s lagging digital infrastructure
One of London’s long-standing strengths has been its strategic location and global connectivity. Situated in a central time zone, the city has historically served as a crucial hub for international business and trade. However, in today’s increasingly digital world, this geographical advantage is proving less significant.
According to Opinium’s Index, the UK was once a top 10 market for connectivity, but over the last 15 years, it has fallen nine places in our rankings related to digital infrastructure. This decline highlights two key challenges.
The first challenge is absolute in nature. The UK faces connectivity and infrastructure issues, particularly beyond London. While the capital boasts high-speed internet and excellent digital access, the country as a whole lags behind. This is becoming an increasing liability in a world where digital accessibility is a critical success.
The second challenge is more relative. Other markets are rapidly advancing in areas where the UK was once dominant. Many countries, particularly in Asia and the Middle East, are making significant investments in digital infrastructure. This shift is evident in the Index’s rankings, where the United Arab Emirates now leads globally in connectivity, and seven of the top ten markets in this category are located in the Middle or Far East. If the UK hopes to re-establish itself as a leading market for entrepreneurship, it must invest in nationwide digital infrastructure improvements.
How London business got so far ahead
Despite the challenges, London remains a powerhouse in one key area: human capital. The city is home to a diverse, highly skilled and dynamic workforce, making it an attractive destination for entrepreneurs seeking top-tier talent to scale their businesses.
Opinium’s Index shows that human capital is the only area where the UK has improved over the past 15 years. This growth is largely attributed to London’s ability to attract and retain world-class professionals. Entrepreneurs benefit from access to a deep talent pool, ensuring they can find the skills needed to build and expand.
London’s cosmopolitan nature naturally fosters innovation. The UK’s universities and research institutions continue to produce skilled graduates that flock to London, and its openness to international talent has been a key driver of business success. However, while this strength is valuable, it has not been enough to balance out the wider national trend.
More widely the gap between the Western and Eastern hemisphere in entrepreneurship is narrowing, and in many cases, the East has taken the lead. Countries in Asia and the Middle East have aggressively implemented policies that attract businesses, improve connectivity and foster innovation. The UK, along with other European markets, must take a hard look at these developments and identify areas where it can improve.
Whilst London remains a strong asset for the UK, it cannot single-handedly compensate for national shortcomings. Policymakers must prioritise investments in infrastructure, digital transformation and regulatory frameworks that encourage entrepreneurship. If London and the broader UK economy are to reclaim their positions as leading global startup hubs, they must adapt to the realities of an evolving business landscape.
James Crouch is head of policy and public affairs at strategic-insight firm Opinium