State of the Somerset Economy 2013 Produced by Marchmont Observatory for Somerset County Council July 2013 1 ACKNOWLEDGEMENTS The Marchmont Observatory would like to thank Rani Budd for her supporting in sourcing and mapping data for this report. This report has been jointly funded by Somerset County Council and the Marchmont Observatory, via European Social Fund Technical Assistance. The Marchmont project team comprised: Hilary Stevens Chris Evans Jo Pye Ben Neild Adam Crews Kevin Aggett Hilary Todd Katie Kelsey 2 | P a g e CONTENTS Acknowledgements ....................................................................................................... 2 Contents ......................................................................................................................... 3 List of figures .................................................................................................................... 9 List of tables ................................................................................................................... 12 Preface ........................................................................................................................... 14 Executive Summary: Somerset, a Successful Economy? ...................................................... 15 Successes .............................................................................................................. 15 Weaknesses in the economy .................................................................................. 16 Future threats ......................................................................................................... 18 Opportunity and growth .......................................................................................... 20 1. Economic geography ........................................................................................... 22 Key findings ............................................................................................................... 22 1.1. Introduction ...................................................................................................... 23 1.2. A strategic location ........................................................................................... 23 1.3. Functional Economic Zones ............................................................................. 24 1.4. Natural resources ............................................................................................. 25 1.5. Settlements ...................................................................................................... 25 2. Demography .......................................................................................................... 28 Key findings ............................................................................................................... 28 2.1. Introduction ...................................................................................................... 30 2.2. Current population ............................................................................................ 30 2.2.1. Urban and rural ...................................................................................... 30 2.2.2. Age structure .......................................................................................... 31 2.2.3. Multi-culturalism ..................................................................................... 33 2.3. Population trends ............................................................................................. 35 2.3.1. Urban and rural ...................................................................................... 36 2.3.2. Age ......................................................................................................... 37 2.4. Population projections ...................................................................................... 40 3. Economic structure .............................................................................................. 42 Key findings ............................................................................................................... 42 3.1. Introduction ...................................................................................................... 44 3 | P a g e 3.2. Structure of the Somerset economy ................................................................. 44 3.2.1. Gross Value Added ................................................................................ 44 3.2.2. Employment ........................................................................................... 47 3.3. Industrial specialisms ....................................................................................... 50 3.4. Sub-economies within Somerset ...................................................................... 51 4. Business competitiveness ................................................................................... 55 Key findings ............................................................................................................... 55 4.1. Introduction ...................................................................................................... 57 4.2. Characteristics of Somerset businesses .......................................................... 57 4.2.1. Sector ..................................................................................................... 57 4.2.2. Employment size band ........................................................................... 58 4.2.3. Turnover size band ................................................................................. 59 4.2.4. Age ......................................................................................................... 59 4.2.5. Business Survival rates .......................................................................... 60 4.2.6. Ownership and autonomy ...................................................................... 61 4.3. Performance of Somerset businesses ............................................................. 62 4.3.1. Changes in the size of the business population ..................................... 62 4.3.2. Productivity ............................................................................................. 67 4.4. Drivers of productivity ....................................................................................... 70 4.4.1. Skills and human capital ......................................................................... 71 4.4.2. Investment .............................................................................................. 72 4.4.3. Innovation ............................................................................................... 73 4.4.4. Enterprise ............................................................................................... 75 4.4.5 Competition ............................................................................................ 76 4.5. Business confidence ........................................................................................ 78 4.6 Barriers to growth ............................................................................................. 79 5. Economic performance ........................................................................................ 81 Key points .................................................................................................................. 81 5.1 . Introduction .................................................................................................... 82 5.2 . National and global context ............................................................................ 82 5.2.1. Policy Context ........................................................................................ 82 5.3 Trends in GVA .................................................................................................. 83 5.3.1. Overall .................................................................................................... 83 4 | P a g e 5.3.2. Trends by local authority district ............................................................. 84 5.3.3. Trends by industry sector ....................................................................... 85 5.4. Trends by employment ..................................................................................... 87 5.4.1. Overall .................................................................................................... 87 5.4.2. Trends by local authority district ............................................................. 88 5.4.3. Trends by industry sector ....................................................................... 89 5.4.4. Trends by public-private employment ..................................................... 90 5.4.5. Full and part-time employment, and self-employment ............................ 91 6. Projections for output and jobs ........................................................................... 93 Key Findings .............................................................................................................. 93 6.1. Introduction ...................................................................................................... 95 6.2. Projections in GVA ........................................................................................... 95 6.2.1. Overall .................................................................................................... 95 6.2.2. Trends by local authority