Scotland and the North East of England led the way in startup company activity in the first half of 2025, according to the latest New Startup Index from NatWest and Beauhurst.

10 nations and regions across the UK recorded a rise in startup activity in the first half of the year.

According to the Index, the North East of England saw the fastest relative growth, with over 10,000 new companies launched — a 19% increase compared to the second half of 2024.

Scotland rose by 17.9%, the West Midlands of England by 16.9%, and the North West of England by 16.5%.

These figures point to a broad-based recovery in business formation across the UK, particularly outside London and the South East of England.

In total, 426,000 new businesses across the UK were registered with Companies House in the first half of 2025.

This follows a volatile 2024, which began with a record 468,000 incorporations in H1 but dipped to 378,000 in H2.

“Sector-wise, application software remains the UK’s most active startup category, with 34,700 new companies formed – up 0.55% year-on-year,” said the report.

“As a dynamic segment of the tech industry, this sector encompasses the development of programmes and apps for work, entertainment, communication, and data management purposes.

“Companies operating in this sector include those building productivity tools like word processors and spreadsheets, creative software for graphic design and music production, and entertainment software for video games.

“Notably, mobile app developers also represent a significant portion of this growth, developing a wide range of smartphone apps, from fitness trackers to shopping platforms and everything in between that shapes modern daily life.

“Hospitality ranked second, with 26,800 new restaurants, pubs, cafés, and takeaways opening nationwide, reflecting an 8.5% increase from the same period last year. This was closely followed by the property development and construction sector, which recorded a 7.18% rise in startups from H2 2024, reaching a total of 25,100.”

Beauhurst Managing Director Henry Whorwood said: “It is encouraging to see some recovery from the incorporation volumes seen at the end of 2024. Whilst 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.”

James Holian, Head of Business Banking at 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 that this momentum is not confined to London, with regional growth underscoring the strength and ambition of founders up and down the country.

“Entrepreneurs and startups 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’re raising our ambitions even further by welcoming another 10,000 entrepreneurs to the programme, launched a £1 million funding competition for small business owners, and expanded our digital support through the new NatWest Accelerator app.

“As the UK’s biggest bank for startups, we play a vital role in nurturing shoots of new business growth to attract jobs and investment to the UK. We’re committed to helping more businesses get started, because we know that when small businesses succeed, so does the UK.”