Economic Intelligence Wales has published its sixth annual report, examining and analysing economic trends in 2023/24.
The report is produced by Cardiff Business School as part of the Economic Intelligence Wales research collaboration between Bangor Business School, Cardiff Business School, the Office for National Statistics, the Enterprise Research Centre and the Development Bank of Wales.
The report shows a drop in the proportion of businesses across the UK accessing external finance, and a continued drop in lending to Welsh small businesses during the latter half of 2023. The number of equity deals has also dropped across the UK, with the 2023 total down by a quarter when compared to the previous year.
But business confidence, as recorded in the Federation of Small Businesses’ UK Small Business Index, saw a return to positive figures as inflation dropped, following nearly two years of negative confidence on the part of small business.
Other points highlighted in the report include:
- 43% of Welsh businesses surveyed think their performance will improve in the next 12 months
- In the first quarter of 2024, UK GDP was estimated to have grown by 0.6%
- The domestic economy remains the top concern for small businesses as a barrier to growth
- Business deaths in Wales continue to exceed business births
- Concerns around falling Welsh exports could have large impacts on the Welsh Index of Production
The report also looks at the yearly activity of the Development Bank of Wales, which in 2023/24 made more than 490 investments across Wales totalling £125 million.
The report notes that more than half of the investments made by the Development Bank during 23/24, across debt and equity funds, went to micro-businesses.
Ken Skates, Cabinet Secretary for Economy, Transport and North Wales, said: “The insights drawn together by Economic Intelligence Wales help inform not only the work of the Development Bank of Wales but are a resource which supports a shared understanding of business and business needs in Wales.
“The report reflects the positive impact of the Development Bank of Wales in supporting businesses in Wales to start-up and grow throughout 2023/24; a year which saw a strong performance from the Bank despite the wider economic challenges.”
Giles Thorley, Chief Executive of the Development Bank of Wales, said: “It’s been a very difficult couple of years for businesses across Wales, and the drops seen in both equity and lending more generally were to be expected while wider economic circumstances remained unsettled. But it’s good to see that businesses have renewed cause for confidence as inflation has dropped – that’s a much-needed shot of optimism after some hard times.
He added: “I’m also pleased that the Development Bank of Wales was able to step in and support Welsh businesses– particularly in the case of smaller businesses, where more than half of our investments went in 2023/24.”
Professor Max Munday, of Cardiff Business School and one of the authors of the report, said: “The annual report again shows the significance of Development Bank of Wales activity with investments in this 2023/24 financial year connected to around 3,400 new and safeguarded jobs, and with micro-sized businesses continuing to gain a significant share of new funding. The wide range of projects in which the Development Bank is engaged, across sectors and infrastructure, is especially encouraging.”
