Home | News & Insights | 2021 | New data reveals Knowledge Intensive (KI) firms in Cambridge continue to outperform national figures

New data reveals Knowledge Intensive (KI) firms in Cambridge continue to outperform national figures


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 (KI) firms. This confirms Cambridge’s status as one of the largest concentrations of KI employment in Europe. However, there are also indications that start-ups and non-KI firms are finding conditions in the city less attractive.

The authoritative data released today via the Cambridge Cluster Insights dashboard by the Centre for Business Research (CBR) at the University of Cambridge, details the annual turnover and employment growth of the 26,000 companies based within 20 miles of Cambridge measured over 6, 3 and 1 year periods. The CBR calculates that corporate employment growth across the Cambridge city region economy within this 20 mile radius was 6.2% pa, 5.0% pa, and 3.7% 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%. As a result of their resilient buoyancy, the share of employment in these sectors has risen across the last 6 years to over 28% 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%. On the other hand, there are signs that employment created by new business start-ups 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% pa, 4.9% pa and 3.6% 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% pa, 0.9% pa and 1.1% 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 growth of 6%. This reflects the expanding economic 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 3 years, but still robust at 2%, even after taking into account the failure of Thomas Cook in Peterborough. Corporate employment growth across Cambridgeshire and Peterborough overall was 5.6% pa, 4.4% pa and 3.2% pa over the 6, 3 and 1 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.

Commenting on the data, 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.

“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,” said Kirsty Gill, Chief People Officer at Arm. “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.”

Mayor James Palmer commented: “This excellent rate of growth in life sciences and information technology shows that it is imperative that the government backs Cambridgeshire and Peterborough with further investment funding in order for us to lead the country out of the covid economic slump.  This work shows the strength of the Cambridgeshire and Peterborough economy prior to lockdown. Another year of significant growth. It is important that all residents can benefit from this. This is why I have brought forward a package of infrastructure investment and skills training across the area. As we come out of lockdown this ongoing analysis of our businesses and their performance will show how the area is recovering. I shall be using this work to ensure government is supporting my investment plans for Cambridgeshire and Peterborough.”

The current dataset, showing all Cambridge-based companies, can be viewed via the Cambridge Cluster Insights tab at www.cambridgeahead.co.uk. Cambridge Cluster Insights is an interactive resource, which allows businesses and individuals to examine individual company data as well as identify where growth is taking place around them.


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Sarah Brereton, Director, Limewash
07796 583 223

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