West Country firms are among the most resilient in the UK but lack confidence in the national economy, according to new research from the Barclays Prosperity Index. The index reported a net confidence level of 36 per cent for the region's companies, more than 20 base points below the UK average.
International trade resilience
Despite lower confidence, South West businesses showed greater resilience in international trade activity than the rest of Britain. SME clients within Barclays Business Bank saw inbound international payments fall by only 0.8 per cent and outbound payments decline by 1 per cent, both slower than the UK average.
Access to finance increases
More companies in the region are accessing external finance, with loan volumes rising 0.5 per cent and overdraft volumes growing 3.3 per cent. The research suggests some of the demand for longer-term borrowing may support future investment plans. South West businesses expect investment levels to grow by eight per cent over the next 12 months, the strongest growth of all regions and four percentage points higher than the UK average.
The top areas for investment include researching and developing new or improved products or services (33 per cent) and new or improved digital products or subscriptions (31 per cent). However, Barclays noted that the stronger-than-average growth in overdraft usage could indicate short-term liquidity management.
Expert comment
James Jordan, head of region for the South West at Barclays, said: “Despite continued geo-political and associated economic uncertainty, businesses across the South West are demonstrating strong resilience and adaptability. Our data suggests firms are taking a disciplined approach to cash management while continuing to invest selectively in the areas that will support long-term productivity and growth.”
National trends
Nationally, geopolitical tensions have hit confidence and investment across the UK, with one in five firms (20 per cent) pausing spending plans due to the uncertain landscape. Meanwhile, 68 per cent expect to increase cybersecurity investment over the next 12 months, but almost half (46 per cent) believe adopting new technologies increases their exposure to cybersecurity risks. Six in 10 firms now proactively use agentic AI, with cloud, cyber and AI together accounting for 44 per cent of planned technology budgets over the next year.
Businesses of all sizes are split on pricing strategy in response to rising costs, with 37 per cent passing them on to customers and 32 per cent absorbing the impact within margins.
