How can the West of England contribute to UK economic growth?

The West of England has a highly educated and skilled workforce, globally competitive universities and leading industrial clusters. Yet there are wide inequalities across the region, and the potential for growth is constrained by problems with transport, housing affordability and lack of investment.

The West of England is among the UK’s most dynamic regional economies, as highlighted in a new strategic economic audit published by the Brunel Centre. Indeed, in 2023, the region took the lead as the most productive combined authority area in England outside London, surpassing Cambridge and Peterborough.

This strong economic performance is supported by multiple interlinked factors. The region has a highly skilled workforce and hosts several internationally recognised universities. Its two cities, Bristol and Bath, draw significant numbers of young professionals, graduates and international students.

This sustains a dynamic labour market and equips the region with one of the deepest talent pools in England. For example, almost half the region’s residents hold a degree, well above the national average.

The West of England is also home to globally competitive industrial clusters and has a strong export performance. Exports rebounded quickly after the UK left the European Union (EU), with EU exports rising 19% above pre-pandemic levels by 2023 while non-EU exports surged by 33%.

This reinforces the region’s shift towards international markets and reflects the global orientation of its strong aerospace cluster. In total, the West of England generated £9.5 billion in exports in 2022, maintaining a significant trade surplus in sharp contrast with the UK’s £44.1 billion trade deficit.

Despite the West of England’s annual growth rate significantly exceeding the national average since 2008, its progress has inevitably been shaped by a broad period of subdued growth and uncertainty in the UK. This national backdrop helps to explain the caution reflected in current business sentiment. It also underscores why regional strengths alone have not translated into the levels of productivity and investment needed for truly inclusive and sustainable long-term growth in the region.

Crucially, the West of England’s ability to translate its strengths into inclusive and sustainable growth is hindered by deep-rooted structural and investment challenges. Pressures on housing affordability, congested and unreliable transport networks, uneven digital connectivity and limited higher-level skills provision outside major urban centres are constraining productivity, restricting labour mobility and widening inequalities.

Housing affordability is one of the region’s biggest challenges: the average household in Bristol spends 44.6% of its income on rent, among the highest levels outside London. Meanwhile, transport congestion in Bristol and Bath is among the worst in the UK.

What do these findings suggest for public policy?

These findings on the strengths of the West of England economy and the challenges it faces draw on analysis by the Brunel Centre, a new data and research centre designed to support sustainable, inclusive growth and industrial strategy in the region.

As greater devolution creates new opportunities in England, a clear understanding of the region’s economic dynamics is vital for designing policies that reduce inequalities and drive sustainable growth. The new audit examines the main constraints on the region’s economy and how they might be addressed.

Importantly, the local authorities that make up the West of England – Bath and North East Somerset (BANES), Bristol, North Somerset and South Gloucestershire – are economically diverse.

South Gloucestershire has maintained strong productivity over many years, supported by its established strengths in advanced manufacturing, aerospace and defence. Bristol, by contrast, has a more service-oriented economy, and despite its scale, has seen slower productivity gains in recent years. Although the city outperformed South Gloucestershire in the early 2000s, it has since slipped behind.

In comparison, BANES and North Somerset – both characterised by more rural, visitor driven economies – have experienced weaker productivity growth. BANES has even recorded periods of decline since 2005, widening the gap with Bristol and South Gloucestershire, while North Somerset continues to have the lowest gross domestic product (GDP) per head of the four areas.

Deprivation and barriers to access are significant problems. More than 51,000 children in the region are living in absolute low income. Youth mental health pressures are severe, especially in North Somerset. And child poverty sharply diverges across the region, with 23% of children in Bristol living in low-income households.

To move forward, the region must work collaboratively across the public, private and voluntary sectors to prioritise productivity-driven growth. The audit’s findings suggest that a ‘productivity premium’ could be unlocked through targeted investments in capital infrastructure, research and development (R&D), education, training and skills development. This could help to address the region’s growing labour market inactivity, which now acts as a barrier to inclusive and sustainable growth.

Strengthening routes into employment, taking coordinated action on housing and transport, and accelerating the transition to net zero are essential. Upgrading transport and digital networks, expanding energy and workspace capacity, and addressing educational attainment gaps between urban and rural areas could also enhance labour market efficiency.

By tackling these challenges directly, the West of England can convert its strong economic foundations into a more inclusive, resilient and sustainable model of growth for both the benefit of the region and the wider UK.