Press releases

Power Up: skills and infrastructure to unlock productivity in the South West

28 November 2018

  • South West employment rate at 79.9%, highest in the UK
  • In seven of 13 sectors analysed by Deloitte, the South West has seen productivity growth outperform national averages
  • Strongest employment growth in the South West since 1997 has been in professional, scientific and technical services; information and communication and health.

Harnessing productivity through skills holds the key for regional growth, according to Deloitte’s latest Power Up report. Slow productivity growth is one of the biggest topics in UK economics. Whilst weak productivity is a global phenomenon, international comparisons suggest that it is particularly acute for the UK as a whole.

Interviewing over 50 business leaders, educators, local government officials and influencers from across the UK, the report takes a unique look at nearly 20 years of ONS (Office of National Statistics) data along with insight from regional business leaders to help better understand and assess how potential productivity and growth areas across the UK and the South West could be unlocked.

Although clear themes emerge from each region in the report, business leaders consulted from the South West cited skills, investing in transport infrastructure across the region and clearer partnering between local government and business support networks as key to improving the region’s productivity.

The South West economy has grown at close to the UK average pace in recent years. Whilst the region is the widest and most disparate in the country, it still has the UK’s highest employment rate at 78.9% and lowest unemployment at 2.9%, a figure well below the UK average rate of 4.1%. It proves that the South West has experienced great job creation in recent decades and, for the sectors analysed for the report, the region has been able to create a net 821,000 jobs between 1982 and 2017.

In seven of 13 sectors analysed, the South West has seen productivity growth outperform national averages since 1997 providing optimism that the challenge can be addressed. The region has led the way in construction, accommodation and food services. Some sectors, such as professional services and information and communications, have increased both productivity and employment at the same time, showing that they are not necessarily mutually exclusive.

The strongest employment growth over the last 20 years in the South West region has been in professional, scientific and technical services; information and communication; and health. The sector in the region that has seen employment fall the most since 1997 is manufacturing.

The research revealed that the South West’s most productive sectors have fewer people employed in them than in the previous two decades, with 34% of the population in 2017 employed in the sectors with the highest output compared to 43% in 1997.

However, whilst in some industry sectors productivity and growth in the South West is heading in the right direction, overall there is a productivity gap between the South West and the UK as a whole. Business leaders interviewed argued more needs to be done, particularly on skills and investing in infrastructure such as transport, if the region is to continue to grow and prosper.

Martyn Gregory, Deloitte’s South West practice senior partner, said: “We’re created a unique insight as to how the South West has fared both pre and post financial crisis by analysing nearly 20 years of data. Whilst we are still not at pre-crisis productivity levels, the outlook is positive. Through talking with key business figures across the South West and finding out their views, we’ve identified key areas that have the potential to unlock productivity across the region, primarily up-skilling, infrastructure and collaboration. Whilst there is not a single definitive answer to the productivity question, we certainly have gained a new perspective of the region’s strengths and challenges.

“Job creation has been one of the South West’s greatest achievements in recent decades and there is further opportunity to build on this. If we replicated the success of the top five South West sectors in this, it could lead to almost 2.1 million more jobs in the region over the next 20 years.”

Gregory added: “The changing shape of the workforce, whether falling or climbing in different sectors across the region, does have an effect on productivity and growth, but not always a negative one. If we look at manufacturing, it’s often been the result of technical changes or more efficient and less labour intensive processes.”

Pauline Biddle, managing partner for Deloitte’s UK regions said: “Analysing data by industry, we looked at the best regional performer for each sector. If this performance was replicated across the UK as a whole, this would be worth an additional £263bn to the economy, or nearly £10,000 for every UK household.”

The report suggests weak productivity is a particular problem for the UK, when compared with other developed economies. Biddle explains: “The slowdown in productivity growth has had a tangible effect. Our analysis shows that if productivity growth had continued at the same rate as in the decade before the financial crisis, UK workers today could work, on average, six fewer hours per week in order to produce the same output.

“However, our UK regions have huge opportunity for growth and there is an overwhelming sense of regional pride and commitment that comes from the interviewees.”


Note to editors

About the Power Up report
The report consulted and interviewed more than 50 business leaders, educators, local government officials and other influential figures in Scotland, Wales, Northern Ireland and the eight English regions outside London. The report describes each UK region and nation’s economic performance. It investigates strengths and weaknesses and outlines a series of proposed actions, deriving from discussions with senior business leaders that can help to raise the contribution of many regions to a new level.

The regions and nations are:

  • East of England;
  • East Midlands;
  • North East;
  • North West;
  • Northern Ireland;
  • Scotland;
  • South East;
  • South West;
  • West Midlands;
  • Yorkshire and Humber; and
  • Wales.

About the Power Up data
The 15 sectors analysed:

  • Agriculture, mining, and utilities;
  • Manufacturing;
  • Construction;
  • Wholesale and retail trade;
  • Transport and storage;
  • Accommodation and food service;
  • Information and communication;
  • Financial and insurance activities;
  • Professional, scientific and technical activities;
  • Administrative and support services;
  • Public administration;
  • Education;
  • Human health and social work; 
  • Arts, entertainment and recreation; and 
  • Other service activities.

All data is sourced from the Office for National Statistics (ONS), some publicly available, others under license agreement.

The employment numbers are from 1982 to 2017.

The productivity (as measured by output per hour worked) numbers are from 1997 to 2015 across 15 industries and all regions. The change in productivity is analysed across three different time frames – pre-crisis (1997-2007), post-crisis (2007-2015) and overall (1997-2015). The annual UK productivity is the average of the productivity numbers for the four quarters. The UK productivity for each industry is the based on the average of all the regional numbers for each industry.

Interviews were conducted with:

  • Carolyn Fairbairn, CBI Director-General 
  • David Noon, Global Brexit Lead, Deloitte
  • Ian Stewart, Deloitte Chief UK Economist 
  • Sir Howard Bernstein Strategic Business Adviser to Deloitte
  • Angus Knowles-Cutler, UK Vice Chairman, Deloitte
  • Pauline Biddle, managing partner for UK regions, Deloitte
  • Business leaders from across the South West

About the South West region
The South West covers Gloucestershire, Wiltshire, Bristol/Bath area, Dorset, Somerset, Devon, Cornwall and Isles of Scilly.

It is the largest English region in terms of area at around 23,800 square kilometres (sq km), and is also bigger in area than both Wales and Northern Ireland.

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

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