The latest South West Business Confidence Monitor shows a region under pressure, with confidence falling again and businesses expecting weaker sales, profits, investment, and research and development over the year ahead.

Business confidence in the South West fell to -18.5 in Q2 from -6.8 in Q1, below the UK average (-14.6), with geopolitical risk the most widely cited rising challenge. Annual domestic sales growth was below the norm and domestic and export sales are expected to slow markedly in the year ahead.

That picture is echoed in our regional member discussion groups, where we’ve been hearing about cost pressures, cautious customers, regulatory change, workforce challenges, and wider uncertainty. The data tells one part of the story; member conversations bring the practical reality behind it to life.

1. Uncertainty is shaping decisions

Global events, domestic politics, and policy change are feeding into choices on pricing, recruitment, investment, and growth. Many businesses are still moving forward, but with greater caution.

2. Costs are testing margins

Labour, energy, materials, freight, business rates, and compliance costs remain significant, while passing increases on to customers is becoming harder in price-sensitive markets.

3. Regulation is becoming a capacity issue

From Making Tax Digital (MTD) and Companies House, changes to employment law and VAT, concerns are about the cumulative effect of several changes landing at once.

4. Technology is a practical opportunity

Artificial intelligence and better data use could support productivity, pricing, and decision-making, but members are clear that governance, judgement, and assurance remain essential.

5. The South West remains resilient.

Across rural, coastal, visitor economy, manufacturing, professional services and community organisations, businesses are adapting, collaborating, and looking for practical support to unlock future growth.

More insights from the South West

What stands out is that the South West is not short of ideas, ambition, or capability. Businesses are reviewing pricing, cashflow, supply chains, technology, and workforce plans with care, and many are still finding opportunities to innovate and collaborate.

• Dropping confidence has been expressed by members in manufacturing, wholesale, care, public sector, property, defence, technology, and tourism, with sector evidence of reduced confidence, cost pressure, cautious demand, and delayed decision-making. 
• Tourism, travel, and hospitality members reported mixed trading conditions, margin pressure, rising overheads, business rates concerns, VAT uncertainty, staffing challenges, and regulatory burden. 
• Small and sole practitioners are seeing confidence issues through their client base, especially around MTD, VAT changes, Companies House requirements, agent registration, software readiness, and client uncertainty, providing a broader view of pressures affecting small businesses and owner-managed clients. 
• Charity and not-for-profit sector members highlighted cumulative compliance, governance and reporting pressures, trustee recruitment challenges, and capacity issues, especially for smaller charities relying on volunteers. 
• ESG / sustainability-focused members feedback points to longer-term regional pressures affecting confidence, including climate risk, insurance, farming and rural resilience, tourism exposure, planning constraints, grid capacity, and infrastructure challenges. 
• Construction - CBI SW received feedback the construction industry, who reported that land is now too expensive and developers struggling to get a return. Also, not currently enough support for first time buyers and affecting demand 
• IT & Communications confidence slump may have been seen more in the West of England region – IT/Tech industry is big in the West of England (Bristol/Bath region) 
• Energy related sentiment – Significant South West sectors which are energy intensive include manufacturing, food production, agriculture, tourism, transport, and hospitality