South West businesses show cautious optimism amid persistent cashflow pressures, Business West survey reveals

Business West's latest Quarterly Economic Survey for 2025 has now been released, and some of the results are promising for the economy in the West of England. Here are the headlines:

• Business West’s Quarterly Economic Survey is a key barometer of business sentiment in the region, surveying businesses across the South West of England and feeding into national data collated by the British Chambers of Commerce
• Recruitment activity increased in Q3, with 41% of businesses attempting to hire, up from 30% in Q2, yet the majority (59%) did not seek new staff, reflecting a still-cooling labour market.
• Confidence indicators improved, with 35% expecting profitability to rise and 45% anticipating higher turnover, but investment intentions remain muted at just 20%.
• Cashflow pressures persist, with a net balance of -25%, and economic uncertainty continues to dominate business concerns - 17% respondents experienced an increase while 42% reported a decline.

South West businesses are navigating a complex economic landscape marked by stabilising prices, improving confidence, and ongoing financial strain, according to Business West’s latest Quarterly Economic Survey for Q3 2025. The findings, when viewed alongside previous quarters, suggest early signs of recovery tempered by caution on investment and liquidity.

In detail:

Recruitment activity rises, but labour market remains cool

41% of businesses attempted to recruit in Q3, up from 30% in Q2. However, the majority (59%) did not seek new staff, indicating that while hiring activity is improving, confidence in long-term growth remains fragile.

A Bristolian adult social care business said: “Recruitment remains a persistent challenge and the government is not listening to business.”

Price stability returns for most firms

Two-thirds (66%) of respondents reported stable prices, while 28% saw increases and 6% reported reductions. Labour costs (74%) and utilities (50%) remain the primary drivers of upward price pressures.

“We are committed to maintaining our current pricing structure until 2030.” said a social enterprise based in Wiltshire.

Trading conditions show modest improvement

Domestic sales remain in negative territory but improved, with the net balance rising to -9% from -20% in Q2. Export sales also strengthened slightly, with the net balance improving to -8% from -19%.

Though as one Bath-based services firm said, “Export to the USA is not viable due to tariffs and politics”  

Cashflow challenges persist

Cashflow remains a key pressure point, with a net balance of -25%. While 17% of businesses reported improvements, 42% experienced declines, underscoring ongoing financial strain.

“Lead times are even shorter… clients avoid paying deposits as they face cashflow problems” said one hospitality firm in Gloucestershire.

Confidence strengthens despite muted investment

Expectations for profitability and turnover improved, with 35% anticipating higher profits and 45% expecting turnover growth. However, investment intentions remain subdued, with only 20% planning to increase spending in the next quarter.

“Struggling with profitability, mainly due to labour costs..." said one Bristol-based manufacturing business.

Economic uncertainty dominates business concerns

General economic conditions and business uncertainty remain the top concerns, followed by taxation, inflation, and labour market pressures.

As one South Gloucestershire retailer put it, “Very concerned about the autumn budget…”  

Our comment

Gus Guntren, Qualitative Researcher and lead on QES for Business West, had this to say about the results:

“This quarter’s results show a welcome shift towards stability, but the underlying challenges haven’t gone away. Businesses are cautiously optimistic about turnover and profitability, yet investment remains muted and cashflow pressures persist. The message is clear: clarity and confidence in the wider economy will be key to unlocking growth.”