Taking The Region’s Economic Temperature

Insights into the economic climate of the South West.

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Taking The Region’s Economic Temperature
Published: 05 Aug 2019 Updated: 13 Jun 2022

It was a pleasure to welcome representatives from some of Bristol’s leading businesses to Smith & Williamson’s offices in the city for our recent economic update event on 10 July 2019.

Nigel Hardy

Business West’s CEO James Durie was among the guests as we took the economic temperature of Bristol and the wider West of England region against the global outlook.

My colleague Daniel Casali, Investment Strategist at Smith & Williamson Investment Management, provided the global view while Chris Hackett, Economic Adviser to the Mayor of Bristol, put the spotlight on Bristol’s economy.

Uncertainty around Brexit

Of course, the big story at the moment, and the thing which overshadows all UK economic analysis and investment decisions, is Brexit.

With the national political conversation currently dominated by talk of an increased likelihood of a No Deal exit, the one thing that I can say that we’re hearing from our clients in feedback, is that they want a deal. They want a stable environment in which they can get on with running their businesses.

They are concerned with life after Brexit and issues such as trading arrangements, tariffs, continuity of supply, exchange rates, access to markets and labour, and remaining competitive.

Access to labour

This is another major headache for our businesses.

Without exception we are hearing that the single biggest issue facing business is access to skilled and unskilled labour. The ongoing reduction in net migration from EU countries is now having an impact.

Pay rates are also increasing and this has a knock-on effect on investment.

Investment decisions

We are seeing three different scenarios with regard to investment:

  1. Investment decisions delayed due to Brexit uncertainty.
  2. Investments being made into the EU zone rather than the UK to mitigate against a No Deal Brexit.
  3. Investments that can no longer be held off now coming through.

Property market

Property is a key sector for us here at Smith & Williamson and one that is often seen as the first barometer of an upturn or a downturn in the economy – and here, things look encouraging.

Anecdotally, I recently counted ten cranes outside my office window, which must be a positive sign. And despite the potential effects of the Brexit uncertainty on new investment, Bristol remains a good bet.

Many large projects are coming to market such as Assembly, Glassfields, Finzels Reach and Redcliffe and many of these are backed by investment from pension funds. This is also true of Filton Airfield and the new Arena Site.

Scale-up, production and media companies remain strong with important signings such as the Channel 4 hub and advanced talk of extensions to infrastructure projects. Will we now see a rail link between Filton and the new Bristol Arena site being built for example? Or extensions to Metrobus?

Corporate finance

Our corporate finance team reports that activity levels are holding up and pipelines are strong. Deals are definitely taking longer to complete however, primarily because of increased due diligence.

The impact of Brexit uncertainty is unhelpful but not terminal. Valuations are underpinned by high private equity demand and the Business Growth Fund leads in the SME development capital arena.

Meanwhile the alternative debt market continues to evolve with over 50 banking licences having been granted to new institutions in the last ten years. Many of these players are looking to fill the gaps served less well by the mainstream lenders.

Corporate recovery

Recent months have seen many high-profile insolvencies on the high street, many of which are sector specific.

The number of cases in the mid-market remains relatively low. This is anticipated to change in the event of a No Deal Brexit. Our restructuring and recovery team is reporting an increase in the number of enquiries from distressed businesses in the region.

As I alluded to earlier, the message from businesses is simple - they just want certainty and stability, and to be able to get on and run their business.


By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.


This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.