Wales has seen its established small and medium-sized enterprise (eSME) population shrink, according to new research from Allica Bank. The number of eSMEs in Wales fell by 3.4% to 24,170 in 2026, down from 25,025 in 2023.
Local authority declines
The biggest fall was in Bridgend, down 11.7%, followed by Caerphilly, down 8.3%; Swansea, down 4.5%; Blaenau Gwent, down 4.3%; and Pembrokeshire, down 3.2%.
Established SMEs (eSMEs), defined as firms employing between five and 250 people, account for 37% of private-sector employment in Wales. This is seven percentage points higher than in London.
UK comparison
While Wales' eSME population fell by 3.4% between 2023 and 2026, London's grew by 5%. Northern Ireland, at 0.2%, was the only other UK nation or region to record growth. The only part of the UK to experience a bigger percentage fall than Wales was the South West of England, down 3.8%. Across the UK as a whole, there was a 0.7% contraction.
Over the longer term, the UK's eSME population has grown by around 7% over the past decade, but London accounted for 44% of that net growth.
Growth and rural impact
Alongside being vital employers, these businesses are key drivers of economic growth. Some 425, or 1.8%, of Wales' eSMEs have grown by 20% or more in the past year, demonstrating that long-established local businesses can still be important sources of growth and investment.
However, the proportion of high-growth firms among Wales' eSME population was the lowest of any UK nation or region. The highest proportion was recorded in London, at 5.3%.
Allica's research also revealed that the impact of eSMEs is even more pronounced in rural areas. Across the UK, they support an average of 48% of employment in rural areas, compared with just 33% in urban areas. Across the UK, 10.7 million people are directly employed by an eSME.
Conrad Ford, chief strategy officer at Allica Bank, said: "Established businesses are the engine of the Welsh economy. They support careers, create apprenticeships, and provide vital services to their local communities.
"That's why the fall in their numbers should matter. When places like Bridgend and Caerphilly lose established businesses, they risk losing employers that have often supported local communities for years.
"We believe that when established SMEs grow, the whole economy grows with them. If the UK Government wants to deliver good growth in every postcode, these businesses need to be much more visible in economic policy. Giving local leaders the tools to understand and support established SMEs would be an important step in this process."
