The North East’s small businesses have shown signs of post-pandemic recovery, outstripping pre-pandemic levels in number.

Between 2019 and 2023 the number of SMEs in the North East grew by 3.5%, representing more than 2,000 more small businesses since the pandemic, taking the region’s SME total to over 60,500.

The research compiled by iwoca—one of Europe’s largest small business lenders - ranks areas in the North of England using ONS data on business and employment, suggests the North East’s post-pandemic entrepreneurship may be a key driver keeping jobs in the region afloat.

The number of employed people in the North East remained relatively stable between 2019 and 2022, with a slight increase of 2,000 in employment. According to the latest available figures, the region is home to nearly 1.1 million working people.

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Catherine McKinnell MP, Member of Parliament for Newcastle upon Tyne North and Minister of State for School Standards, said: “Small businesses don’t just create vital jobs, they are also the lifeblood of communities, so it’s a tribute to the hard work of those who run our local businesses, and the loyalty of those who shop in them, that Newcastle has had such a strong small business recovery.

  “The Labour Government is committed to working with small businesses to support growth, remove barriers and build on the resilience and strength of SMEs in the North East and beyond.”

Within the North East, Sunderland led the region's SME boom of all local authorities, boasting a 7.4% increase in the number of small businesses between 2019 and 2023. Newcastle ranks a close second with a 6.9% increase in SMEs following the pandemic.

Councillor Nick Kemp, Leader of Newcastle City Council, said: “Small and medium-sized businesses are the backbone of the British economy responsible for 16.7m jobs last year. The rate growth of SMEs in Newcastle far outstrips the national average which says a lot for the entrepreneurial spirit we have in our city.

“This research demonstrates our inclusive economic strategy is making a difference, creating jobs, and attracting new businesses which is good news for our residents.

"We are a business-friendly city that has bounced back from the pandemic and our door is always open to anyone who wants to create a business in the city or relocate here. We will help you achieve your ambitions.”

Paul McEldon OBE, Chief Executive of the North East Business and Innovation Centre said: “It’s fantastic to see this research confirming the boom in entrepreneurship in Sunderland. The city is undergoing huge transformation and investment post-pandemic, and our entrepreneurs are clearly motivated by new and evolving goods and services.

"In the last year, we’ve received hundreds of enquiries from people wanting to learn more about setting up in business and many of them have been inspired by emerging trends and opportunities, for example the rise of social entrepreneurship, the impact of digital technology and rising demand for services in health and wellbeing.

“Having helped over 6,000 people set up in business and social enterprise since 1994, we are excited to be contributing to the growth of this innovative and dynamic community in Sunderland.”

Marianne O’Sullivan, policy manager at the North East Chamber of Commerce, said: “We know SMEs play a vital role in the region’s economy and it’s positive to see growth in the North East helping to create more jobs locally. Our latest Quarterly Economic Survey has shown some increase in business confidence with a reduction in staff shortages and more firms looking to invest in their plant."

Seema Desai, COO at iwoca said: “The North of England continues to prove its immense economic capacity and resilience despite the blow that the Covid-19 pandemic delivered to small businesses across the country. For example, Sunderland’s recovery in sectors such as transport are bolstering job creation and enabling growth in years to come.”