Efforts to “level up” the UK economy are under increasing scrutiny as a growing digital divide emerges between small and medium-sized enterprises (SMEs) in London and those based elsewhere in the country, new research reveals.
According to a study released on Monday by e-Residency, nearly three-quarters (74%) of SMEs outside the capital report having no access to digital support programmes such as mentoring, software tools or startup accelerators. In contrast, 67% of SMEs in London say they are actively benefiting from such initiatives.
The research paints a stark picture of the disparities between urban and regional business ecosystems. While 66% of London-based SMEs say that access to high-speed internet and co-working spaces has significantly boosted their growth, just 37% of their regional counterparts report similar advantages.
The gap is also evident in business confidence and growth outlook. In the capital, 78% of SMEs consider their business to be established or on a growth trajectory. That number drops to 62% for companies located outside London. Awareness and utilisation of digital support is similarly uneven: 96% of London SMEs are aware of national schemes, with 62% taking advantage of them, compared to just 60% awareness and 24% uptake among regional businesses.
Geography is also influencing strategic direction. The majority of London-based SMEs credit their location and proximity to investors as critical to their digital progress, with 82% saying being in a major city boosts funding opportunities. Outside the capital, just 44% agree. Regional businesses place more emphasis on the importance of local infrastructure and workforce access.
Confidence in funding availability also differs sharply. Only 15% of regional SMEs describe their access to investment as “very adequate,” compared to 31% of businesses in London. Meanwhile, 60% of London firms say they have strong access to business partnerships, against 48% for regional companies.
As a result, a growing number of entrepreneurs in the capital are exploring international routes to scale their operations. According to the study, 76% of London SMEs are considering cross-border business structures to tap into better digital infrastructure and support. Only 29% of regional firms said the same.
Liina Vahtras, Managing Director of e-Residency, said the findings underline the need for more inclusive digital support across the UK. “Founders everywhere have the potential to thrive,” she said. “But this gap isn’t just about infrastructure – it’s about confidence, networks, and access to opportunity. Bridging it is essential if we want a truly balanced digital economy.”
The report comes amid growing pressure on small businesses grappling with inflation, talent shortages, and shifting consumer expectations — underscoring the urgent need for targeted regional investment in digital growth.
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