The Scottish capital came in second place in a new study, closely tailing Leeds which came in first, and beating Birmingham, Glasgow and Manchester which came in third, fourth and fifth respectively.
The full research, based on government and business data, was compiled by personal finance experts at price comparison site NerdWallet. It follows a record growth in start-ups.
There were more new businesses created between April and June than in any other second quarter on record. The trend comes as workers increasingly leave London for other UK cities thanks to the rise in remote working triggered by the pandemic.
Edinburgh has climbed four places in the rankings since the report was last completed in 2019. The city also had the third highest number of people with an NVQ Level 4 qualification equivalent or above, the sixth highest business survival rate and the fifth largest active business population.
Nic Redfern, finance director at NerdWallet, said: “It is fantastic to see so many in Britain starting their own business despite the challenges posed by supply chains and Covid-19.
“As we build back from the pandemic it is essential that we do more to support new start-ups in key UK cities such as Edinburgh to help unlock more of their economic potential.
“Edinburgh is a leading financial centre and has thriving digital, science and tech industries, which have developed partly thanks to the internationally renowned University of Edinburgh and initiatives such as the Edinburgh BioQuarter.”