Higher fuel costs and supply chain pressures are among the challenges facing businesses

Mid-sized businesses across the South West are reducing or pausing investment amid the global political uncertainty being caused by the Middle East conflict, according to new research.

Nearly three quarters of the businesses questioned in the survey by advisory firm BDO said supply chain pressures and higher energy and fuel costs were among the biggest challenges they faced.

The bi-monthly survey of companies with revenues of between £10m and £500m found material delays and costs, stock shortages and suppliers folding were a top concern for more than half (51 per cent) of leaders in the region.

Nearly three in five (59 per cent)of South West firms questioned said they intended to halt or reduce investment as they waited for the situation in the Middle East to stabilise.

As a result, the region’s companies are considering steps such as increasing customer costs (46 per cent) and reducing or not paying a bonus (46 per cent), BDO said.

More than two-fifths of the region’s business leaders are also looking to prioritise UK-based suppliers (41 per cent), and a further 36 per cent are considering onshoring or nearshoring, in a move that could provide a boost to South West manufacturing.

Andrea Bishop, regional managing partner at BDO in the South West, said: “The mid-market is vital to the South West and wider UK growth. Instead of focusing their sights on expansion, they are struggling to absorb the latest economic shock in an uncertain global and political backdrop.

“Mounting pressures around energy, fuel costs and supply chains, which were issues affecting businesses even before the conflict in Iran, are only adding to the sustained feeling of uncertainty amongst regional business leaders.”

According to BDO, South West business leaders are looking to the government for extra support in case of further escalation. Popular policy or support measures for the next 12 months include transport and fuel cost relief; measures to reduce employment costs; and dedicated supply disruption support such as grants for businesses materially impacted.

“The government must ensure it listens to the wants and needs of South West business leaders in this crucial segment,” Ms Bishop added.

“Addressing these challenges head on could be the key to providing the stability needed to reignite the region’s economic growth.”

Rachel Reeves has agreed to proposals by mayor Helen Godwin announced at UKREiif

The chancellor has backed new plans to create a mayoral development zone across north Bristol and South Gloucestershire after admitting the West Country has “had its potential held back” for “too long”.

Rachel Reeves made the comments at UK regeneration summit UKREiiF as the West of England mayor set out major proposals to grow the local economy and tackle the housing crisis by building tens of thousands of homes.

Mayoral development zones identify places with substantial growth potential and can be followed by the establishment of mayoral development corporations (MDCs) – statutory bodies set up by regional mayors to deliver regeneration and development in their areas.

There are currently nine MDCs in other parts of the country, including the London Legacy Development Corporation, which has overseen the regeneration of Stratford following the 2012 London Olympic Games, delivering 12,000 new homes.

The South West zone would cover the region’s emerging new town – Brabazon – and the West Innovation Arc, in South Gloucestershire and north Bristol.

“For too long the West of England has been denied investment,” the chancellor said.

“That’s why alongside mayor Helen Godwin, we’re backing a new mayoral development zone, meaning new homes and better transport links, boosting the region’s economy and giving the West of England an ambitious vision for the future.”

Ms Godwin has been banging the drum for the South West at the Leeds-based conference this week amid the publication of a new £17bn investment prospectus for the region.

“It’s time to make the most of devolution and more quickly deliver the right homes in the right places, to help tackle the housing crisis,” she said.

“Our region’s first mayoral development zone designation will be a major moment in making that vision a reality, and realising our enormous and exciting further potential as a place.”

The announcement comes just weeks after the English Devolution and Community Empowerment Act became law, and as the region’s political leaders look to use what powers they have to grow the West’s economy.

According to the West of England Combined Authority (Weca) any MDC would be developed through significant local and political engagement.

“We have so much to be proud of across the area shortlisted to become one of the government’s new towns, with our new Bristol Brabazon train station opening later this year ahead of the new Aviva Arena,” Ms Godwin said.

“Working together, this part of the West of England – with the right transport investment to connect the Science Park, Bristol Parkway station, and Brabazon – can deliver 40,000 new homes and the same number of new jobs over the longer-term.”

Housing secretary Steve Reed said the region’s first mayoral development zone would make “a huge difference” to people’s lives.

“It means working families across the West of England can truly benefit from real change – with thousands more affordable homes, well-paid jobs and greater transport links between communities,” he said.

When Bristol Brabazon train station opens this year, it will strengthen the connections between the West Innovation Arc growth zone and the Central Bristol and Bath growth zone’s Bristol Temple Quarter and Bath Riverside Innovation District.

Maggie Tyrrell, leader of South Gloucestershire Council, said the non-statutory designation presented “a real opportunity” to focus significant investment in homes, jobs, transport and other infrastructure.

“However, it will be vital that this is delivered in close partnership with the council and our communities, with the right infrastructure, strong local input, and clear governance,” she said.

With nearly £1bn already invested in Brabazon as part of its multi-billion-pound planned investment to transform the former Filton Airfield, YTL UK Group has secured planning permission for 6,500 new homes, three new schools and a major park, where more than 500 residents have already moved in.

Colin Skellett, chief executive of YTL UK Group, added: “We welcome the announcement of the MDZ as this will be key to unlocking the wider investment in the West Innovation Arc.

“Brabazon is fast becoming the most exciting multi-purpose destination in the West.”

This week, Bromford Flagship LiveWest (BFL) – a UK provider of affordable homes – and YTL Developments unveiled a new strategic partnership.

Robert Nettleton, chief executive of BFL, said: “Brabazon and the West Innovation Arc has enormous potential and demonstrates what can be achieved when regional leaders and housing providers work together around a shared vision for long-term growth.”

The news of the MDZ follows South Gloucestershire Council discussing the potential options to support the delivery of the emerging new town earlier in May, and comes ahead of an item at the mayor and council leaders’ next meeting on June 5.