South West rides investment wave to become UK growth hotspot -ForrestBrown
The South West is emerging as one of the UK’s key investment and innovation hotspots, according to new analysis from innovation incentives consultancy ForrestBrown. Rising deal values, defence spending and significant R&D expenditure are all pointing to increasing confidence in the regional economy.
ForrestBrown’s projections suggest that, under an illustrative 5% annual growth scenario, annual equity investment in the South West could reach around £1.1bn by 2031, with deal volumes reaching approximately 475 a year, assuming the same annual growth rate.
The estimates build on data from Tech South West which found that investment reached £211m across 93 deals in Q1 2026.
Data from Freedom of Information (FOI) requests, submitted by ForrestBrown, provides further evidence of private capital flowing into the region. Data shows £43.7m of private investment associated with Plymouth & South Devon Freeport, alongside 66 jobs created or supported against £65,806 of public funding reported in the FOI response.
Major investment commitments are also strengthening the region’s pipeline. Ministry of Defence figures show industry spending in the South West reached £6.6bn in 2024/25, while the Government’s £50m Plymouth Defence Growth Deal is expected to unlock up to £34m from industry and local partners.
R&D investment points to further growth
The South West is seeing significant value concentrated in R&D, with the latest HMRC figures showing around £2.1bn of qualifying R&D expenditure associated with businesses registered in the region in 2024/25.
Building on that £2.1bn expenditure base, ForrestBrown’s analysis indicates that annual qualifying R&D expenditure associated with South West claims could reach approximately £2.5bn by 2029/30 – around £400m above current levels – if it grows broadly in line with the OBR’s medium-term nominal economic growth outlook.
The value represented by individual claims has also increased significantly. Qualifying R&D expenditure per South West claim has doubled from approximately £351,000 in 2021/22 to £702,000 in 2024/25, while average R&D tax relief per claim has increased by around 85% from £62,000 to £115,000.
Recent Patent Box statistics paint a similar picture, with the South West seeing a significant increase in the overall value of the relief received, which almost doubled from £48m in 2023/24 to £95m in 2024/25, representing the largest increase of any region.
Christopher Penfold, commercial director at ForrestBrown, said: “The South West has all the ingredients to become one of the UK’s most important innovation economies. Investment is rising, businesses are committing billions to R&D, and the region has established real strengths in sectors such as defence, aerospace and advanced engineering.
“Now, we need to harness that capital effectively so more businesses start, scale and ultimately choose to stay in the South West. That means creating the right conditions for companies to keep investing in R&D, commercialise their ideas and intellectual property, and access the capital they need to grow. If we can get that right, this could be a pivotal moment for the region to become a vital cog in the UK’s growth engine.”