Cambridge Ahead has found that Cambridge’s economy has grown extensively in recent years, with significant employment growth in the last six years. Growth has been the most significant in knowledge-intensive companies in the science and technology sectors.

Cambridge Ahead is a business and academic membership organisation which emphasises the importance of investment in infrastructure.

The study offers insight into the economic circumstances in Cambridge and the wider Cambridgeshire area up to the start of the first Covid-19 lockdown, in March 2020.

Cambridge Cluster Insights, the name of the annual study, was compiled by the Centre for Business Research at the University of Cambridge. It examined data from company accounts and surveys, as well as direct insights from major employers including Aveva and AstraZeneca.

The study looks at 26,000 companies in a 20-mile radius of Cambridge - 5,372 (21%) of which were in knowledge-intensive sectors including IT, life science and technology manufacturing - which had a combined turnover of nearly £50bn and employed 239,000 people.

Knowledge-intensive companies accounted for 28% of employment (68,000 people) and 38% of the total turnover (£18bn).

University and research organisations in the area have also continued to grow, with a further 37,000 people employed.

Figures for corporate employment growth within 20 miles of central Cambridge - 6.2% over six years, 5.0% over three years and 3.7% over one year -greatly outperformed the national economy according to the study, despite indications of a slowing down in job creation in the city.

With a growth of 5.5% in 2019-2020, this slow-down was less evident in knowledge-intensive sectors.

The rate of growth has slowed down in the last three years, most significantly in the last financial year 2019-2020, with start-ups and companies outside the knowledge-intensive sector avoiding setting up business in the city.

Matthew Bullock, Master emeritus of St Edmund’s College, and Chair of Cambridge Ahead’s regional economic planning group, told the Cambridge Independent that the study shows that Cambridge, with the right investment, can be one of the “growth beacons” in Britain’s post-pandemic economic recovery.

However, despite the positive picture painted by the study, attention has been drawn to the need for investment in infrastructure, with Bullock arguing that “the population of Cambridge has tolerated high rates of growth with a low level of infrastructure investment, and it’s not fair.”

He continued: “Cambridge has a particular role in pulling the country out of the post-Covid problem and creating the science-based economy that ministers talk about, therefore they must put their money where their mouth is and put the infrastructure in.”

Similar warnings about the need for investment in infrastructure arose in the 2018 Cambridgeshire and Peterborough Independent Economic Review (CPIER), which equally encouraged increased investment.

The review also expressed concerns about the potential threat that Brexit would pose to Cambridge’s international economy, stipulating that this may be the reason for the slowing of job creation that the study shows.

“What we saw after the referendum is a number of companies saying we fear Brexit might have an impact on their future accounts,” states Dr Giorgio Caselli, from the Centre for Business Research, responsible for conducting the research along with Dr Andy Cosh.

“It’s not possible to draw a direct causality, but it does provide signals that there may be an impact from Brexit”.

“And that is true of other things that the CPIER report talked about in 2018 as well, in terms of the potential issues facing the future of the Cambridge economy, like rising business costs. The overall levels of growth and job creation remain high but the trajectory has eased off slightly, and that provides warning signals that warrant close attention by local and national policy makers.”

The study also shows that in the last year, large companies in the region have grown the most (5.6 %), but overall, the number of companies has decreased, with companies closing down at a higher rate than start-ups are established. It indicates that companies are moving out of Cambridge, with preliminary analysis suggesting that this may be due to the rising costs of doing business.

Cambridge Ahead have said that the data needs to be used to guide regional decision-making regarding policy.

Dan Thorp stated: “Decision-makers need to take decisions that unlock the growth and job creation potential here, but balance that with social needs, like housing that isn’t unaffordable, and environmental needs and quality of life.”

He added: “By commissioning this [study], Cambridge Ahead wants to take an overview of the system in a way that wouldn’t be possible from national data. It allows for long-term strategic decision-making based on what is happening over the medium term.”

Bullock suggests this planning is crucial in the continuation of the ‘Cambridge Phenomenon’ - that is to say the “explosion” of technology and life science companies that has occurred in Cambridge since the 1960.

“This is a spring of companies bubbling up. It is not about companies coming from California [...] The growth story of Cambridge is a series of layers but the kernel is indigenous companies. Those companies formed and based here have grown unbelievably fast.”

“If you don’t plan for the right growth rate, you end up with higher house prices, higher rents, people living further away and commuting longer, so the underlying sizing is absolutely fundamental.”

Cambridge MP Daniel Zeichner told Varsity that Cambridge’s prosperity “is not a given” and past success is “no guarantee for the future”.

He continued: “With the double whammy of the pandemic and leaving the European Union we have already seen unemployment rise, and every week I hear from businesses struggling with Customs red-tape.”

He added: “We also need to ensure the city remains a place people want to live. That means protecting what is special about our city and developing it in a sensitive way. I think Cambridge people have been remarkably tolerant at the speed with which the city has grown but there is a tipping point. New housing needs to be high-quality, not like some of the substandard rush jobs we have seen, and prices need to be affordable. People need to be able to get around, and in and out, of the city speedily, and in an environmentally friendly way.”

Varsity has contacted Liberal Democrat Councillor Tim Bick for comment.