UK supports innovation hub Cambridge as expansion tests city limits

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dispatch

The UK economy, like many of its continental European peers, faces well-established challenges. These include high debt-to-GDP ratios, high fiscal deficit-to-GDP ratios, and an aging population that places increasing demands on the state even as growth remains stagnant.

But all is not lost, and last Thursday’s events highlighted that some regions are still expanding strongly and, crucially, attracting domestic investment into activities that will help Britain earn a living in the world for decades to come.

Innovate Cambridge, an organization that aims to promote the city of Cambridge and the wider region as a world-class center for life sciences and technology, hosted the annual summit, which was attended by over 500 CEOs, founders, investors and policy makers.

Among them was Patrick Vallance, Minister for Science, Research and Innovation, a veteran of the UK life sciences sector who previously led research and development at GlaxoSmithKline. Zoubin Ghahramani, vice president of research at AI pioneer Google DeepMind, and Nigel Wilson, former CEO of life insurance giant Legal & General and current chairman of venture capital firms Cambridge Innovation Capital and Canary Wharf Group, were also in attendance.

Participants learned that the Cambridge region has experienced the strongest economic growth over the past decade and is now the best location for investment in science of any region in the UK outside of London.

In the process, it is increasingly attracting international investment. The report, published by Innovate Cambridge in partnership with Cambridge Innovation Capital, data provider Beauhurst and Cambridge Enterprise (the commercialization arm of the University of Cambridge), reveals that since 2015, early-stage life sciences and deep tech companies in the region have raised £7.9 billion ($10.5 billion), two-fifths of which came from overseas investors. This is up from just 7% a decade ago, with US investors showing particular interest, taking part in nearly one in five of Cambridge’s total funding rounds during this period.

The figures come five months after data provider Dealroom reported that Cambridge now ranks second in the world for the number of unicorns (start-ups achieving $1 billion valuations) per capita, comfortably ahead of major technology and life sciences centers such as Boulder, Boston and New York. The best known of these are self-driving technology company Wayve and quantum computing company Quantinuum, but these are far from isolated examples.

So far, very encouraging. But there was also a sense at the event that future growth may be in jeopardy because Cambridge’s phenomenal expansion has not been kept up by the corresponding growth in private and public infrastructure.

A report published by Cambridge City Council in March said: “Demand for housing remains high and there is a significant need to build new homes locally.” The group observed that local home price-to-income ratios are very high by historical standards, and there is a dire need for the kind of affordable housing needed by key workers such as nurses, teachers and firefighters.

This was echoed in a report in the same month in Varsity, Cambridge University’s independent student newspaper, which said that many PhD students – people frequently involved in start-ups – no longer live in the city.

The report notes: “With academic salaries as they are, even Cambridge’s top professors will find it difficult to get onto the city’s wealth ladder. What are the prospects for young graduates?”

A lack of housing, whether bought or rented, is a major potential impediment to future growth.

Another factor contributing to the housing shortage is the lack of water and supporting infrastructure. The east of England is drier than other parts of the UK due to Anglian Water supplying areas outside the city limits, suggesting some areas receive less rainfall than Israel.

Concerns about water scarcity and sustainable supply led the Environment Agency, a government agency that aims to protect and improve the environment, to block the construction of more than 9,000 homes and 300,000 square feet of laboratory space in the Cambridge metropolitan area between December 2022 and November 2023.

Another potential obstacle is chronic traffic congestion. The university’s Department of Land Economics reported in June this year that average daily travel time within the city increased by 12% from 2022 to 2024 alone.

All of this is starting to impact growth, with the Cambridge region falling from fourth to sixth place in the Global Innovation Index over the past two years, overtaken by South Korea and Singapore.

Paul Williamson, senior vice president and general manager of the Internet of Things (IoT) at Arm Holdings, told the summit that the UK has not kept up with the growth in chip designers. He revealed that Arm, one of Cambridge’s biggest success stories, had brought just 325 new employees to the company in the city that week, but was increasingly “taking a global perspective” and needing to recruit elsewhere around the world.

“Varsity Line”

The government has responded by strengthening the entire Oxford-Cambridge ‘corridor’.

Last week, Chancellor of the Exchequer Rachel Reeves announced plans for a £500 million investment in new housing and transport for the region, part of which will support the ongoing reopening of the so-called Varsity Line, the Oxford-Cambridge railway that was abolished in 1967.

Mr Vallance, who rose to prominence during the pandemic by appearing on TV almost every night as the government’s chief scientific adviser, told the summit that businesses “that might have disappeared to the US 10 years ago” would remain in the UK if the government achieved its objectives.

He added: “This region has all the ingredients to be Britain’s answer to Silicon Valley and the Boston Cluster. A place to turn world-class innovation into economic growth and benefit the whole country.”

But the fact that Mr Vallance had to emphasize the latter point highlights the public’s widespread sensitivity to the fact that growth and prosperity are increasingly concentrated in a handful of places, such as London, Oxford and Cambridge, while other regions appear to be left behind.

And that’s a problem Britain has had for a long time.

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London-listed stocks continued to perform well this week. FTSE100 It hit a new high on Tuesday, supported by the ongoing rally in global tech stocks. The UK index has risen 2.9% since last Wednesday.

This week has been a busy week for earnings. The owner of Gucci kering, porsche And a large number of banks are among those that have reported their quarterly results.

of british pound The currency closed lower on Tuesday, down about 0.7% against the US dollar compared to the previous week. UK government yield 10 year bondThe gilt, known as gilt, has fallen since last Wednesday, rising from 4.486 to 4.397, as investors look forward to the Bank of England’s decision on interest rates and the UK budget next month.

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very soon

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