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More work to be done to shore up business in Wales

Welsh flag (Adobe Stock)

New research from FSB Wales has found that business confidence is building in Wales – and is rebounding at the highest rate across the UK. 57.5% of businesses in Wales expect their business performance will improve in the next three months compared to 50% in England and Scotland and 27% in Northern Ireland.

23% of Welsh businesses expect their business to get worse over the next 3 months. While still a worrying number, this is a significantly lower proportion than businesses in the UK who expect their business performance to get worse (32%). The net positive confidence rating in Wales (those that feel more positive than negative) is therefore +34%, compared to +19% for the UK as a whole.

41% of Welsh businesses report increased revenue in the last three months against 36% reporting a decrease – so the picture is mixed but these figures are also more positive than the UK as a whole.

However, 47% of Welsh businesses anticipate that their revenue will rise over the next 3 months against 18% anticipating decreasing revenue – demonstrating that as the economic recovery begins, business owners are gradually becoming more confident about their future. 52% of Welsh businesses are paying wages that are higher than they were 12 months ago (with only 6% reporting lower wages) which also shows that business resilience is holding and firms are still able to invest in their workforce.

On a less positive note, 50% of firms state that they are currently trading, but at a much lower capacity – for example, with staff still on furlough. 65% say they have been running at reduced capacity over the last 3 months.

This represents a huge part of Wales’ business stock that is not currently working at full capacity and with pinch points approaching – such as the end of the furlough scheme and the last Welsh Government grant payments, businesses will need support to adapt and to meet this new phase of the pandemic without it representing a cliff edge for their business.

Ben Francis, FSB Wales Policy Chair, said:

“As Wales’ economic recovery takes its tentative first steps, we can see the early impact that this is having on Welsh firms. Confidence is on the up, and the tenacity and ambition that are the hallmarks of Wales’ businesses continue to drive investment in communities across Wales.

“That business owners are able to invest in their staff and increase wages after the year we’ve all just experienced demonstrates the commitment to being good employers prioritising the needs and wellbeing of their workforce, traits which we know are widespread across Welsh business owners.

“However, whilst this data signals that we are moving in the right direction, we can’t let this be an excuse to take our foot off the gas. There is still so much work to be done to shore up Wales’ businesses after a disastrous year and set them on the right track for growth and prosperity in the coming months. We want this to be only the beginning of the conversation about the support that businesses need from Welsh Government.

“Business Wales has reached more businesses than ever this year and has been a lifeline for thousands of businesses across the country. From providing advice, signposting to resources and managing millions in grant support, Business Wales has proved its role in Wales’ business support landscape time and time again. Whilst it might not be perfect, it is our experience that many businesses would not have weathered the pandemic without access to Business Wales support and it is this support that we wanted to see solidified for the future. The funding model for Business Wales is unclear and we want to see UK and Welsh Government actively working together to eliminate uncertainty for businesses wherever possible – outlining a plan for the forward role of Business Wales is one way to achieve that.

“Furthermore, the economic recovery is only at the beginning. For many firms, there is so much work to do to adapt to a post-Covid economic landscape and to change their business in order to do so. FSB Wales is working with Welsh Government on what support might be needed to facilitate that, and we would urge Welsh Government to be bold and creative to help firms meet their ambitions in the coming months.

“There is still much uncertainty on the horizon as firms respond to the end of the furlough scheme and we move into autumn and winter whilst trying to understand the impact that Coronavirus will have on our daily lives. Welsh businesses are tenacious, ambitious and beginning to once again feel confident, but they need Welsh and UK Governments to match that ambition and to continue to create the best possible circumstances within which to run a business in Wales.”