Southwest Businesses: Building Optimism and Unlocking Growth in 2025

To celebrate the Southwest, hgkc are about to launch the latest season of our podcast, Finding your North Star, curated in partnership with Somerset Chamber of Commerce, in which we will be talking to prominent leaders across Somerset about their lives and their work; the aspirations, challenges and opportunities they see and have across the region; and why, for many of them, the question is why would anybody want to live and work anywhere else?

As we move further into 2025, there is plenty to celebrate about the state of business across the region. While no one denies the challenges of the current climate, the mood among local leaders is one of optimism. They are not standing still. Instead, according to the findings of recent research conducted by KPMG, they are investing, diversifying and preparing to seize opportunities for the future.

Technology at the Forefront

One of the most exciting trends is the focus on technology. Many are prioritising investment in areas such as artificial intelligence (AI), cyber security and digital transformation, recognising that technology is the key to staying competitive and opening new opportunities.

There are growing clusters of digital talent and tech innovation. AI is transforming how businesses understand their customers and streamline their operations. Cyber security is no longer just a technical consideration but a way of building trust and winning bigger contracts. Digital transformation is enabling Southwest firms to compete nationally and internationally, often punching well above their weight. And world-class engineering companies like Leonardo are leading the way, with innovative academic institutions who are partnering with them to provide engineering apprenticeships.

This technological focus is helping to future-proof the region’s economy, and it gives cause for genuine optimism.

A Region Ready to Diversify

Technology is only one part of the story. Another encouraging sign is the appetite for diversification. Whether it’s a rural manufacturer adding a design consultancy arm, or a professional services firm launching new advisory lines, Southwest businesses know the value of resilience. By broadening what they do, they reduce reliance on a single market and build greater stability for the long term.

Exploring New Markets

Many businesses are actively targeting entry into new markets. The Southwest has always been outward-looking, thanks to its ports, transport links and trading traditions. From food and drink exports to cutting-edge green technologies, businesses here have long been ready to explore beyond their own backyards. Expanding into new regions and countries not only creates growth but also brings new ideas, partnerships and inspiration back to the region. 

Challenges on the Horizon

It would be unrealistic to ignore the challenges. Inflation continues to be a concern. Rising costs for materials, wages and energy remain challenging. Added to this are questions over possible tax changes in the Autumn Budget. Yet, despite these headwinds, Southwest businesses are showing resilience. Instead of being paralysed by uncertainty, they are pressing forward with plans to innovate, diversify and invest. 

A Fresh Appetite for Investment

One of the most striking developments is the growing openness to private equity. Almost half of businesses (44%) are turning to private equity, whilst 36% are considering capital markets or IPOs. This presents an opportunity. Private equity can bring not only capital but also expertise, networks and governance that help businesses grow faster and more sustainably. For firms looking to expand overseas, invest in technology or scale up production, this fresh appetite for investment could be transformative.

Long-Term Thinking

What is most inspiring about the Southwest business community is the long-term perspective being taken. Investments in AI and digital aren’t just about today’s trends, but about embedding capabilities for the next decade. Diversification is seen as a route to long-term stability. Exploring new markets is about building opportunities beyond immediate boundaries. And the interest in private equity reflects a willingness to think creatively about how growth can be funded.

This balanced, considered approach shows that Southwest businesses are not simply chasing short-term wins. They are building for the future, for their employees, their communities and for the region as a whole.

A Region with Distinct Advantages

The Southwest also has advantages that other regions envy. Its universities, colleges and research institutions create a strong pipeline of talent and innovation. Sectors such as life sciences, marine technology, nuclear and renewable energy have already gained momentum. Projects such as Hinkley Point C, Agratas, Gravity, iAero, Celtic Sea Power, are all creating new opportunities. The region’s natural assets - its coastlines, countryside and culture - make it a magnet for people seeking a better quality of life, which in turn helps businesses attract and retain skilled staff.

The Great South West pan-regional partnership has set out a vision for the region to deliver the UK’s energy transformation, while securing defence and energy supply, and delivering economic growth. It means the Southwest is not only a great place to start and grow a business, where people want to stay and build their lives, but a region that can play a major role in delivering the UK's future security.

The Road Ahead

The story of the Southwest economy in 2025 is one of optimism and opportunity. Yes, inflation, tax changes and other pressures will continue to test businesses. But the overall picture is of a region ready to embrace the future, through technology, diversification, market expansion and new sources of investment.

It is a story of resilience, creativity and ambition. Southwest businesses are not waiting for change to come to them, they are shaping their own futures. By building on their strengths and seizing new opportunities, they are laying the foundations for sustainable growth and prosperity.

For those of us who live and work in the Southwest, that is something to celebrate. This region has always had the ability to balance tradition with innovation, community with ambition. Now, more than ever, it is showing the rest of the UK what can be achieved with vision, courage and determination.

The future of the Southwest economy looks bright — and the stories you will hear as our new podcast season unfolds will reinforce why the Southwest, and Somerset in particular, offers such opportunity.

Contact us here to let us know about your experience of living and working in the Southwest, and the vision you have for your business.