Business West’s Quarterly Economic Survey: South West businesses are cautiously optimistic, while adapting to uncertain times

• Over half (57%) express confidence in their business’s prospects for the next 12 months
• Yet, half of the participants hold pessimistic views about the national economic outlook over the next year
• 40% anticipate an improvement in their profits over the next 12 months, signalling a more positive outlook than in previous quarters
• 19% of businesses reported an increase in their workforce, and 24% expect growth in the next three months, reflecting cautious optimism amid labour market complexities

Business West’s latest Quarterly Economic Survey (QES), which polls businesses across the South West, reveals over half (57%) of the 332 respondents express confidence in their own business’s prospects for the next 12 months. However, half of the participants hold pessimistic views about the national economic outlook over the next year.

Download your copy of the report here

The survey reveals a complex landscape for businesses characterised by persistent challenges. These include labour market tightness, rising costs, and overall business uncertainty. 

Yet, despite these challenges, easing inflationary pressures and a modest upturn in domestic sales provide reasons for cautious optimism.

Matt Griffith, Director of Policy at Business West, said: 

“As the next election begins to loom on the horizon, this survey offers some local business insights that all parties would be wise to listen to. Businesses in our area are cautiously optimistic about the year ahead, yet there is a clear need for greater certainty, and also support when it comes to recruitment, working with our local skills system and reaching net zero.

These businesses appear to have accepted that uncertainty is the new status quo and are doing their best to adapt accordingly. This report is testament to the resilience of our local economy and business people, but is also a warning against complacency and the need for a sustained approach to driving economic improvement from local and national government.”

Simon Hurley, Director at Gloucestershire-based retailer Rothko and Frost Limited, said:

“We have a plan to mitigate these problems and improve our cashflow, turnover and profitability. We'd rather be putting this effort and innovation to building upon our previous efforts rather than having to work so hard just to stand still, but we can't stress too much about circumstances so far outside of our control.”

Simon Barbato, CEO of Bristol-based creative agency Mr B and Friends said:

“We have experienced a lull from March - June, but business from existing clients has bounced back sharply and new business enquiries has ramped up.”

Allan Sinclair, Owner of Bristol-based biophilic lighting company Sky Inside UK Limited said “We are bringing more manufacturing back to the UK and have new innovative products and patents pending.”

Other key statistics include:

Labour Costs: Labour costs remain a significant source of inflationary pressure, reported by 62% of respondents. Filling vacancies remains a challenge, with 71% encountering recruitment obstacles.

Net Zero: the level of climate awareness within the business community has remained consistently high, with 69% of respondents recognising climate change as a significant issue. Tax incentives and increased access to funding and finance were selected by 40% of participant businesses as the most needed forms of support to reduce their environmental impact. 

Improvement in Sales: The net balances for UK sales and orders have improved compared to Q2 (-2% and -6% in Q3 compared to -12% for both in Q2). Domestic sales net balance in the services sector returned to positive territory in Q3 (2%).

Export Sales: Export sales remain in negative territory but experienced a slight improvement compared to Q2's results (-18% in Q2 to -11% in Q3).

Overseas Markets: The main overseas markets for survey respondents continue to be Europe (89%), North America (58%), and Australasia (42%).

Concerns and Priorities: General economic conditions remain the primary area of worry for 66% of respondents (down from 69% in Q2), followed by general business uncertainty (53%) and inflation (51% - a notable decrease from 60% in the previous quarter).

Profit Outlook: A significant number of survey respondents (40%) anticipate an improvement in their profits over the next twelve months, signalling a more positive outlook than in previous quarters.