If the rate of small businesses reaching for external finance is a barometer of health, Gloucestershire could be getting on track for recovery.

That’s the implication of findings from the government’s British Business Bank (BBB) in its latest annual Nations and Regions Tracker.

After reporting a decline among most UK nations and regions in 2022, freshly released data from the state-run economic investment bank suggests small businesses in the South West are now on the up.

Louis Taylor, BBB’s CEO, said: “We are seeing promising signs that the use of external finance among smaller businesses is recovering after a decline in 2022. Unsurprisingly, our world-class universities continue to play a crucial role in this, supporting emerging innovation-led clusters across the UK.”

A spokesman added that use of external finance declined in all UK Nations and regions in 2022, but was picking up again in the first half of 2023.

They said: “Throughout 2022, 37% of South West smaller businesses were using external finance, which was in line with the national average of 36% and a drop of nine percentage points on the previous year (46%).

“The share of smaller businesses that would be willing to use finance to grow also declined from 35% in 2021 to 27% in 2022, falling below the UK average of 31% last year.”

But this new report suggests national data from the first half of 2023 is showing signs of recovery with levels of external finance use returning to 2021 levels in the UK as a whole (43%), with 42% of smaller businesses in the South West anticipating in late 2022 that they would need finance in the following 12 months.

The Nations and Regions Tracker 2023 also found that, in 2022, the combined Nations and regions outside of London recorded their first year-on-year decline in the number of equity deals since Beauhurst’s data collection began in 2011 (-10%), with the total investment value in these areas also falling (-11%).

● The state-onwed British Business Bank was created in 2014 to drive sustainable growth and back innovation across the UK by ensuring smaller businesses have access to capital. The £200m South West Investment Fund was launched early this year, which is part of a series of funds which will deliver £1.6 billion of finance in the South West, Scotland, Northern Ireland, Wales, North of England and Midlands.