What makes the West of England economy distinctive?

What does the evidence tell us?

The West of England’s sectoral structure aligns closely with the UK government’s Modern Industrial Strategy priorities. The region’s three largest areas of value added – professional and technical services, administrative services and manufacturing – map directly onto government-identified ‘IS-8’ sectors that drive growth (Department for Business and Trade, 2025).

Since 2008, regional output growth has outpaced national trends in four priority sectors: advanced manufacturing (including aerospace and electronics), digital and technologies, creative industries and professional and business services, with particularly strong performances across creative and professional services.

Consistent with this profile, Bristol ranks among only two large cities (alongside Leeds) outside of London that perform above expectations in attracting these frontier industries, as firms often co-locate to utilise the benefits of sectoral specialisms (Wang and Swinney, 2025). This positions the region well for future policy support and investment.

Which sectors make up the region’s economy?

The sectoral structure of the West of England economy provides an essential foundation for understanding its productive capacity, employment base and prospects for long-term growth.

The business base is not uniformly distributed across the region. The largest concentration of firms is in Bristol, where there are 20,190 enterprises (41% of the total), followed by South Gloucestershire (10,730), North Somerset (9,590), and Bath and North East Somerset (8,855). These spatial patterns reflect distinct local specialisations: the professional and financial services cluster in Bristol’s city centre, the Filton-Patchway aerospace corridor in South Gloucestershire, Bath's heritage-tourism economy, and North Somerset's distribution and logistics networks.

Table 1 summarises the sectoral distribution of economic activity in the West of England Combined Authority (WECA) and North Somerset in 2023 across three dimensions: the number of enterprises, which reflects the breadth and organisation of the business base; employment, which captures labour-market weight and social salience; and gross value added (GVA), which indicates where economic value is generated. These dimensions are ranked by their contribution in the region and benchmarked against UK averages. Considering these indicators side by side highlights not just what the region does, but which sectors underpin income generation, which absorb labour, and which generate income from numerous firms.

Table 1:  Sectoral distribution of businesses, employment and output, 2023 (West of England vs UK)

Source: Office for National Statistics (ONS, regional gross value added (balanced) by industry (local authorities); Business register and employment survey (BRES); UK business counts (inter-departmental business register, via NOMIS).

The data confirm a service-dominated economy, consistent with national patterns. Services account for just over four-fifths of total GVA in the West of England, compared with around 80% for the UK overall. Within this broad category, however, several service activities stand out as distinctive strengths for the region.

Professional, scientific and technical activities remain the largest single contributor to regional output (9.2% of GVA), above the UK average of 8.3%. The sector also ranks first in enterprise share and third in employment, highlighting the concentration of small and medium-sized firms engaged in legal, technical and consultancy work, as well as research and design. This alignment of high GVA and firm count signals a deep specialisation and enterprising culture of knowledge-intensive services.

Administrative and support service activities are also unusually prominent: the sector contributes 9.1% of GVA, far exceeding the UK figure of 5.3%, and ranks mid-table for both enterprises and employment. This pattern implies the presence of a smaller number of large, productive operations in business process, facilities management and logistics, which play a significant role in the region’s service base.

Manufacturing remains an important but not dominant component of the WECA’s economy. The sector contributes 8.8% of GVA, only slightly below the UK average of 9.1%, but ranks ninth for both share of enterprises and share of employment. This indicates a relatively capital-intensive structure, where a limited number of firms generate substantial output per job. Rather than mass-production, this configuration highlights established and growing high-value manufacturing niches in the region. WECA’s manufacturing strength is driven by government-identified growth-driving advanced manufacturing industries like aerospace, advanced engineering and electronics. What’s more, it is one of only two UK city-regions outside of London that is outperforming expectations in attracting these industries (Wang and Swinney, 2025).

Foundational and public services, including health and social care, education, and public administration and defence form the institutional backbone of the regional economy. Collectively they account for more than a quarter of all employment in the region, broadly in line with national shares. Education ranks fourth in employment and sixth in GVA, underlining the significance of the region's universities and further education institutions. Public administration and defence contribute 6.5% of GVA – again above the national average of 5.0% – reflecting the concentration of government, defence and emergency-service employment in and around Bristol. These sectors collectively underpin local demand and provide the institutional stability that supports private-sector activity in the West of England.

There are distinct relationships between enterprise counts, employment and value added in different sectors in the region, reflecting their underlying business models. Construction, for instance, ranks second in enterprise share but only mid-ranking for employment and GVA. This pattern is typical of fragmented local markets dominated by small contractors and self-employed trades; accommodation and food services show a similar configuration. By contrast, information and communication activities contribute 6.1% of GVA, slightly above the UK average of 5.9%, despite accounting for only 5.9% of employment, confirming the region's moderate but meaningful specialisation in digital and creative industries.

How does this compare with national patterns?

Three structural patterns emerging from these data are noteworthy.

First, there is a concentration of economic value in the region. Sectors with the highest enterprise shares (professional services 17%, construction 14%) are fragmented into many small businesses, while sectors with modest enterprise counts (administrative services 9%, manufacturing 4%) generate disproportionate value.

Second, employment intensity varies dramatically in the West of England. Health and retail absorb over 25% of workers, while contributing 17% of GVA, whereas manufacturing employs just 5.5% of the workforce but generates 8.8% of output.

Third, the relative underweight of financial services (5.8% of GVA versus 8.8% nationally) is offset by exceptional strength in administrative and professional services, suggesting a regional specialisation in business services over financial intermediation.

Major UK city-regions each exhibit particular sectoral strengths. In the case of the West of England, the sectoral configuration is not merely a scaled version of national patterns. Instead, it reflects a distinctive regional combination of a globally significant aerospace base with deep-tech capabilities in semiconductors, quantum technologies and advanced engineering that is rare among comparator economies (Invest Bristol and Bath, 2024; Beauhurst, 2023). Within this configuration, professional and technical services in the region function less as ancillary support and more as core productive sectors that are closely integrated with, and essential to, the region’s wider industrial base.

Why do these findings matter for WECA’s approach to economic growth?

The region’s sectoral structure aligns closely with the UK government's Industrial Strategy priorities. The West of England's strengths in professional services, digital technologies, creative industries and advanced manufacturing correspond directly to four of the eight IS-8 sectors (Department for Business and Trade, 2025: 14).

This alignment extends to regional strategy too. WECA's Growth Strategy identifies five priority sectors – advanced manufacturing, digital and technologies, clean energy industries, creative industries, and the everyday economy – four of which overlap directly with the national Industrial Strategy framework. Centre for Cities analysis shows that these sectors tend to co-locate: around 10% of firms in these sectors span across multiple IS-8 sectoral categories (Wang and Swinney, 2025).

This tendency towards cross-sector activity points to the importance of co-location and complementarities between industries. In the West of England, an integrated business ecosystem enables mutual benefits where professional services support the manufacturing sector, and where creative industries increasingly intersect with growing digital technology industries.

These interdependencies suggest that place-based investments in infrastructure and networks may be as important as sector-specific interventions in realising the region’s growth potential. The impact and potential for place-based approaches to the regional economy are expanded in Understanding the West of England's Incubator Economy.

Conclusion

The sectoral composition of the West of England’s economy has resulted in key relationships within and across industries. These links contribute to the economic distinctiveness of the region in two ways.

First, the professional and technical activities sector is characterised by a high number of enterprises indicating low proportionate value contributions, but its predominant share of overall regional value added suggests effective specialisation rather than market saturation.

Second, across the regional economy, a number of key sectors contribute disproportionate value from a small number of firms, due to the established and growing high-value niches that co-locate in the area. These conditions place the West of England at the forefront of a forward-thinking economy, building on strengths in high-value sectors and industries that have enabled a strong economic base and present opportunities for expanding regional and national growth.

References

Beauhurst (2023) The Deal: UK Investment Report 2023. London: Beauhurst. Available at: https://www.beauhurst.com/research/the-deal-2023/

Department for Business and Trade (2025) The UK’s Modern Industrial Strategy, London: HM Government. Available at: https://www.gov.uk/government/publications/industrial-strategy

Invest Bristol and Bath (2024) Key Sectors: Aerospace and Advanced Engineering. Bristol: West of England Combined Authority. Available at: https://www.bristolandbath.co.uk/key-sectors/aerospace-advanced-engineering/

Wang, Y. and Swinney, P. (2025) Eight Sectors, One Story: The Geography of the Industrial Strategy. London: Centre for Cities. Available at: https://www.centreforcities.org/wp-content/uploads/2025/06/eight-sectors-one-story-1-1.pdf