New research from Lloyds Bank shows that three-quarters of indigenous Welsh firms are upbeat about the growth prospects for the Welsh economy over the next three years. The latest business barometer from Lloyds reveals that 75% of firms are confident, with a third (32%) being very confident.
Growth expectations and investment concerns
Over a third (34%) of Welsh firms believe the Welsh economy's growth will outperform the UK economy over the next 12 months, while 29% disagree, coming in just above Scotland at 31%.
However, only 38% feel that Wales receives its fair share of public investment, the second lowest reading in the UK, just one percentage point higher than 37% in Yorkshire & Humber. Despite this, 24% of businesses surveyed say they have already witnessed notable growth in the Welsh economy over the previous three years.
Drivers of past and future growth
Of those who identified growth in the last three years, the main reasons for success were cited as investment in digital infrastructure (38%), apprenticeship schemes (33%) and transport and logistics infrastructure (32%).
Looking ahead to the next three years, Welsh firms anticipate investment in communities, such as town centre regeneration and housing (49%), a local planning regime supportive of business development and growth (45%) and investment in Welsh universities, business incubators and research and development activity (44%) as being the main drivers of economic growth.
Nathan Morgan, area director for Wales at Lloyds, said: “It’s encouraging to see Welsh businesses feeling confident about their growth prospects, particularly when fewer than two in five believe Wales receives its fair share of public investment. Firms are also clear about what this investment should be used to make the biggest difference, including in community development.
“And, with more than a third of firms believing Welsh growth will outpace the UK economy in the next year, there’s clearly ambition about what Wales can achieve. If that confidence is matched by the right level of investment, it can help translate into stronger, sustained economic growth.”
UK-wide comparison
The barometer also shows that more than four in five UK businesses are confident in their regional economic growth in the next three years, with planning and investment in community and transport reported as the key drivers of future regional economic growth. However, there is a divide in how businesses perceive public investment is distributed across the UK.
Confidence was highest in the North East, where 90% of businesses expect regional economic growth, followed by the South East at 89% and the North West at 88%. When businesses were asked about public investment in their region or nation, 85% of London firms perceive their region receives its fair share. This falls to 37% of businesses surveyed in Yorkshire and the Humber and 38% for businesses in Wales. This compares to 64% of all businesses across the UK who perceive their region or nation receives its fair share.
Meanwhile, 62% of businesses in London think it will outperform the UK economy in the next 12 months, the highest proportion surveyed. By comparison, only 28% of businesses in the East Midlands and South West believe their region will outperform the UK economy, followed by 31% in Scotland, 34% in Wales and 37% in the East of England.
Amanda Murphy, chief executive for Lloyds Business and Commercial Banking, said: “Businesses across the UK are telling us they see opportunities to grow. Turning this ambition into action requires public and private investment working together to create the right environment for growth. Whether its investment in infrastructure, skills, innovation or research, businesses have a clear view of what they need locally to drive growth. Every region and nation has its own unique strengths and, by building on these, businesses will have the confidence to invest, create jobs and unlock their full potential.”
