Should you move your business to Manchester?

by ManoloMongeloes

With the BBC’s move to Manchester, many other companies will be wondering: what are the advantages and disadvantages of moving to Manchester?

In a now-famous 1991 article, economist Paul Krugman analysed why cities develop. He said that people like to live near manufacturing companies, because that’s where the jobs are. Also, manufacturers like to set up shop where there are lots of people – people are both potential employees and customers, and the nearer your customers live, the lower your transport costs.

So you get a ‘virtuous circle’, a feedback loop where businesses move where the people are and people move where the businesses are. This may seem obvious, but it’s nice to hear it from an expert.


So is there going to be a boom in Manchester, and should you move your business there? Here are a few things to think about:

Which industry?

Is your firm in the kind of industry where location is important? Krugman named transport costs as a big reason to move to highly-populated areas, but this only applies to firms which make physical things. If your firm provides a service, like legal advice or risk portfolio management, you have no real transport costs; you can just interact with clients via email, phone, and even video-conferencing.


Often Krugman’s ‘virtuous cycles’ happen within a single industry. For example, in 2004 the BBC announced its plans to move to Salford, Manchester. This led to the building of MediaCity UK in Salford, which houses over 50 companies in the creative field. This year, ITV is planning to move some jobs there too.

So if you’re in the creative industries, now is a great time to move to Manchester, as lots of people with the right skills are there, and lots more should be moving soon, according to Krugman’s theory.


Of the BBC staff who were asked to move to Salford, only 55% agreed. You might find similar figures among your own workforce. Forcing through an unpopular move could have a serious effect on staff morale. However, this depends on the size of your business. If it’s just three people, none of whom have kids in school, a move could be much easier, and your colleagues will presumably be pleased at how much cheaper houses are up north. The average house price in Greater London is £440,000, almost three times the figure for Greater Manchester.

Which is most important in deciding whether to move?

High speed rail

The high speed train service between London and northern England will obviously be a great boost to business in the north. However, the first line won’t open until 2026, and that’s only to Birmingham. The lines to Manchester and Leeds will follow six years later.


The world surely has enough financial acronyms: AIR, APT, ARM, and hundreds more just within the ‘A’s. However, MIDAS is one worth remembering. Run by the local government, the Manchester Investment Development Agency Service offers free advice and information for companies thinking about moving there, as well as help with relocation, recruitment, and networking.


Paul Krugman
Economic geography expert and Nobel-winner Paul Krugman writes for the Guardian, now and then

The MIDAS touch
MIDAS is doing well at helping businesses relocate to Manchester.

The BBC's move
Many at the BBC are reluctant to move to Salford, the Telegraph claims

Updated: 01/25/2012, ManoloMongeloes
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