London is #1 EU tech city – but Nesta warns on cost of living

London has topped Nesta’s index of top EU tech cities for both starting and scaling up – that’s despite it coming last out of 35 cities on the measurement of its cost of living.

The team at Nesta consulted with entrepreneurs, investors, government and academics to come up with 10 criteria to measure the EU’s top tech destinations, including digital infrastructure, culture and skills.

Germany is the only country to have two cities in the top 10 for both startups and scaleups, and has the largest number of viable tech cities across the entire ranking, with four.

They include Berlin at number seven for startups and nine for scaleups, along with Munich, Stuttgart and Cologne.

The UK’s Cambridge cluster came in at number 11 on both rankings, with Oxford at number 13 for both startup and scaleup companies.

The European Digital City Index, a dynamic tool available online, is part of Nesta’s work with the EU’s Lisbon Council to promote the digital economy.

Top ten cities for digital entrepreneurs


  1. London
  2. Amsterdam
  3. Stockholm
  4. Helsinki
  5. Copenhagen
  6. Paris
  7. Berlin
  8. Dublin
  9. Brussels
  10. Munich


  1. London
  2. Stockholm
  3. Amsterdam
  4. Helsinki
  5. Copenhagen
  6. Paris
  7. Brussels
  8. Dublin
  9. Berlin
  10. Munich

Speaking to Tech City News, Stian Westlake, Nesta’s director of policy and research, issued a stark warning for London.

“The first message is obviously ‘yay for London’ because London came out top for both metrics.

“It’s best for relatively new as well as growing digital companies, with availability of finance at both early-stage and later-stage, decent quality of talent and workforce.

“One of the most interesting things was that when balancing the data out, even when taking into account the shockingly high price of rent and transport, that didn’t outweigh the benefits.

“London was 35 out of 35 for the cost of living but the other things are currently compensating for that.”

Warning to Mayor

“I would say to the Mayor of London that it’s now time to work on the bigger picture issues like the cost of housing and transport,” Westlake explains.

“Given a lot of tech workers are on reasonably high wages they are less sensitive to housing and transport costs, but they like living in an exciting, buzzy city with things to do.

“London is brilliant from that point of view but the risk is that it might not stay that way if you look at things like the closure of the Curzon Cinema in Soho or the Black Cap pub in Camden.

“If our real-estate industry realised that these things actually make a city worth living in, and things like these close, the tech industry will see an impact.

“London also needs to keep the talent pipeline fresh which means we can’t clamp down too much on immigration.”

Although Manchester was not chosen as one of the top 35 analysed for the index, Westlake believes northern cities could benefit if London doesn’t address its cost of living crisis.

“If you’re a national politician, you should be looking to somewhere like Manchester as the next tech cluster. We have been failing to build housing at scale in London for a very long time.

“A lot of regional policy has failed but we need to understand how we encourage economic growth in Manchester, Leeds, Birmingham.

“There’s been a glimmer of this in the ‘Northern Powerhouse’ initiative but maybe we could try even harder.”

The index will be updated in 2016 and expanded to include more EU cities.