UK cities are way down the list, with London languishing at 29, a big fall from the fifth position it occupied in 2007. It is closely followed by Italy’s top ranking city, Naples at 30.
Overall, the European Cities Entrepreneurship Rating, conducted with support from the French bank Banque Populaire, (ECER-Banque Populaire), shows European entrepreneurs are increasingly satisfied with the environment and level of support for their endeavours in Europe’s cities. According to the survey’s authors, this rise in satisfaction signals that Europe is making progress towards a more entrepreneurial society.
“The entrepreneur is still the source of wealth creation and redistribution, and sometimes also an innovation driver and jobs provider. For these reasons, a society that helps and protects its entrepreneurs is a mature society,” claims the report.
Having lagged behind, relatively speaking, in its promotion of entrepreneurship, Europe is now catching up year-by-year, and at times displays remarkable local performances. This is particularly true of the Scandinavian countries, and in general the northern countries of Finland, Sweden, Germany and Austria are doing a better job of satisfying their entrepreneurs than the southern countries of Greece and Italy. However, the north-south divide is less pronounced than in 2007 when the first ECER survey was carried out.
This latest survey is based on a telephone questionnaire of nearly 2,400 entrepreneurs, in 14 different languages, in 37 major European cities, in 19 countries.
Helsinki: top marks in 2009
According to the report there are several reasons for Helsinki taking the top spot. First, there are several institutions dedicated to entrepreneurship, such as the Helsinki School of Creative Entrepreneurship, which plays a pivotal role in entrepreneurship promotion and training in the Helsinki area. It is meshed in multiple economic and social networks locally, and in the past few years has built many partnerships with local development agencies in the area.
The city continues to make a heavy investment in entrepreneurship, as reflected by the recent Helsinki Metropolitan Entrepreneurship Academy programme, which began in January 2009. In addition, Finland has for several years given national support to developing research programmes to foster entrepreneurship.
German cities figure prominently
The ECER-Banque Populaire Ranking confirms the strong position of Germany, with its cities showing a clear rise in satisfaction levels. Munich, Hamburg and Frankfurt stand out, achieving entrepreneurial performances well above the country’s average. Overall, German entrepreneurs seem satisfied and are generally less affected by the global economic crisis than their counterparts elsewhere in Europe.
The authors feel one of the key reasons for this is that the crisis came later to Germany. Whereas other countries – notably the UK and Ireland – have faced difficulties since early 2008, Germany’s economy only began to feel the first symptoms in mid-October 2008, six months after its European counterparts.
In addition, the German government responded very quickly to the first signs of crisis with numerous recovery measures, including a €480 billion bank rescue plan agreed in mid-October, giving banks credit guarantees to facilitate interbank lending and recapitalisation.
Two further plans saw a €31 billion package of measures adopted in early December, including a change to the accounting of writedowns, tax breaks for clean vehicles, and a €20 billion lending programme. The second plan provided €40-50 billion of tax breaks, cuts in social security contributions, and investment in infrastructure.
There is also plentiful aid for German companies handed out at all levels from federal to Länder, and municipal sources. Such aid includies tax-free investment subsidies, loans at very favourable rates, guarantees, tax exemptions for investment grants and business-tax exemptions.
UK cities fall down the list
The warm feelings of entrepreneurs in Germany have not been echoed by their counterparts in the UK, where Birmingham fell from third spot in 2007 to bottom at 37th in 2008, and as noted, London dropped 24 places.
ECER reveals high dissatisfaction among UK entrepreneurs regarding public provision for fostering business creation, a finding completely at odds with the 2007 survey in which UK entrepreneurs were among the most satisfied.
The report says the UK government is making itself highly unpopular because business people feel there is a glaring shortage of aid, with consumer spending power given the priority in government rescue plans. The SME aid plan came seven months after the onset of the crisis, and entrepreneurs consider it far from sufficient.
On top of this, although the UK government has injected billions of pounds into the banking system, banks have put a freeze on business loans.
France targets entrepreneurs
France, meanwhile, is trying to address the economic crisis by maintaining support for entrepreneurs. Local support for entrepreneurs has been deliberately stepped up, and the four French cities in the survey all improved their position this year.
Lille, for example, now views start-ups as its growth engine, and has more than 20 start-up funding and support bodies.
However, the report’s authors say the proliferation of bodies offering support for entrepreneurs may become a problem. There are roughly 3,000 agencies in France, which, in one way or another, support business creation, and well over 100 that handle aid for companies. The report points out that this abundance raises questions.
“It may help cater for the huge variety of creator profiles, but it remains an inextricable labyrinth. [...] If French cities want to improve their rankings, rationalisation is a prerequisite.”
The four Italian cities in the survey are at the tail end of the ranking, well behind those in Northern Europe. Italian administration is viewed as inefficient by entrepreneurs, despite Italy’s long tradition of entrepreneurial dynamism, with its dense network of SMEs, subcontractors and small/micro enterprises.
Despite the global crisis, local factors matter
It is evident that the views of entrepreneurs are being coloured by the global economic crisis, which is making it difficult to focus on the underlying framework of support. But it is interesting to see that the local environment – which is singled out as a critical factor in many academic studies – remains important to entrepreneurs.
The ECER study paid special attention to various aspects of this, including the availability of suitable property, the quality of the transport network, facilities enabling exchange between entrepreneurs, such as clubs, networks and events, the knowledge capital in local universities and laboratories, the availability of skills and the quality of the living environment.
Overall entrepreneur satisfaction is fairly good, except for Athens, the only European city to rate below 50 per cent, satisfaction levels range from 60 per cent to more than 80 per cent.
This is the area where the north-south divide is clearest. Among the top 10 cities, nine are in Northern Europe. Of the bottom 10, seven are in the South.
To view the report results in full, go to: http://www.ecer.fr/resultat_en.html.
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