Scotland sees start-up surge and one surprising sector stands out

With a 17.9 per cent increase in new business incorporations, compared to the second half of 2024, Scotland ranks second only to the north east of England in relative growth, according to the latest New Start-up Index from banking giant NatWest and Beauhurst.

The report noted that the first-half uptick reflected a “revitalised entrepreneurial landscape” across the country, with founders responding to local demand and economic opportunity.

Perhaps surprisingly, the most active sector was found to be hospitality, which saw 2,131 new restaurants, pubs, cafés and takeaways established in the first half of 2025 - an 18.7 per cent increase from the prior six-month period, and despite the cost-of-living and national insurance pressures facing the industry.

Meanwhile, property development and construction recorded 1,316 start-ups, up 23.1 per cent, and tradespeople and trade services experienced the highest sectoral growth at 27.1 per cent, with 1,305 businesses launched.

The figures highlight Scotland’s growing role in the UK’s business recovery, with start-up momentum extending beyond traditional hubs. More broadly, the latest index found that ten UK “regions” recorded a rise in start-up activity in the first half of 2025, signalling renewed confidence in the UK’s entrepreneurial landscape, experts said.

James Holian, head of business banking at Royal Bank of Scotland parent NatWest, said: “The first half of 2025 has shown that the UK’s entrepreneurial spirit is not only alive but accelerating. What’s particularly encouraging is the surge of innovation coming from regions like Scotland, which has emerged as the second fastest-growing area for start-ups in the UK. This momentum reflects the depth of talent and ambition among founders up and down the country.”

The north east of England saw the fastest growth compared to the second half of 2024, with a 19 per cent increase in the number of start-ups, totalling 10,400. Other regions also posted strong gains - the West Midlands by 16.9 per cent, and north-west England by 16.5 per cent.

Overall, 426,000 new businesses were registered with Companies House in the first half of 2025. This followed a volatile 2024, which began with a record 468,000 incorporations in the first half, before sliding to 378,000 in the second half.

Holian added: “Entrepreneurs and start-ups are vital to our economy and at NatWest we’re proud to have supported over 10,000 new businesses through our NatWest Accelerator programme, creating 12,000 jobs, and driving £700 million in investment so far.

“This year, we’ve raised our ambitions even further by welcoming another 10,000 entrepreneurs to the programme, launched a £1m funding competition for small business owners, and expanded our digital support through the new NatWest Accelerator app.

“We’re committed to helping more businesses get started, because we know that when small businesses succeed, so does the UK,” he added.

Henry Whorwood, managing director at Beauhurst, said: “It is encouraging to see some recovery from the incorporation volumes seen at the end of 2024. While still down from previous first halves, this recovery is impressive when against a challenging macro background, and policies announced in the Budget that were antagonistic to entrepreneurs.”

Lord Livermore, financial secretary to the Treasury, added: “It is extremely welcome to see start-up activity increase in ten separate regions, helping to deliver jobs and investment in communities right across the UK.

“Through our £120 billion capital investment in growth-generating projects, our Plan for Small and Medium Sized Businesses and our Industrial Strategy, we are backing Britain’s entrepreneurs and start-ups to expand further, grow faster and create more well-paid jobs.”

NatWest highlighted Clovo as a “standout success story” from its Accelerator hub in Glasgow. The AI-powered health platform, co-founded by Rory Skinner, was incorporated earlier this year. It delivers “hyper-personalised” prehabilitation and rehabilitation programmes for surgical and cancer patients, aiming to improve recovery outcomes, enhance patient experience and reduce healthcare costs.

Skinner, chief executive of Clovo, said: “The NatWest Accelerator has been instrumental in our development, providing not just a base to work from - with a strong community of like-minded entrepreneurs - but also expert coaching, access to a strong network, and invaluable introductions. The support has helped us make rapid progress.”

Technology

A separate study earlier this month examining Scotland’s tech sector revealed a “surprising” jump in the number of new incorporations to a record high.

The analysis found that a total of 507 technology businesses were incorporated north of the Border in the second quarter of 2025, up 15 per cent from the same period last year. The number of tech incorporations also rose quarter-on-quarter, by 25 per cent, from 405 during the first quarter of 2025.

Audit, tax and consulting firm RSM UK, which conducted the research, noted that all areas of the UK were up on last year, with nine out of the 12 regions monitored recording the highest number of new tech incorporations since 2019, prior to the Covid-19 pandemic.

Will Simpson, head of technology for RSM in Scotland, said: “This surprising jump in new tech incorporations to a record high suggests that, despite numerous headwinds, tech entrepreneurs and business leaders in Scotland have realised uncertainty may be the new norm, therefore they need to invest and innovate through the headwinds.”

Scotland’s tech sector sees company start-ups hit record high