A Year of Opportunity for Investment in Wales

As we step into 2025, the investment landscape in Wales presents both challenges and reasons for optimism. Reflecting on the past year, there are strong indications that Welsh businesses and their regions are poised for meaningful growth, supported by positive economic trends and opportunities in emerging technologies. 

The latest Good Growth for Cities Index highlighted Cardiff as the fastest-growing city outside London in 2024 and 2025, with gross value added (GVA) growth projected to reach 2.0% this year. This is no small feat and reflects the strength of Wales’ economic foundations, including vibrant sectors such as manufacturing, health and social work, and financial services. Swansea is also on a growth trajectory, though at a slightly slower pace, showing that the economic benefits are not confined to one city. For businesses in these areas, this growth underpins a fertile ground for innovation and expansion. 

The growth expectations for Cardiff and Swansea are not just figures on a page; they represent opportunities for businesses and investors to capitalise on the momentum. In my role supporting the CCR Innovation Investment Capital Fund, I’ve seen how scaling up innovative Welsh businesses can have transformative impacts on the region. This year, I’m optimistic about seeing even more innovative propositions emerging from local universities, hubs, and corporates – ventures that will strengthen the reputation of Wales as a destination for innovation and investment. 

Of course, the macroeconomic environment will play a critical role in shaping the year ahead. The UK Government’s October Budget brought a mix of implications. For businesses, the increase in employer National Insurance contributions will create cost pressures, particularly for labour-intensive sectors like retail and hospitality. However, the Budget also drove a spike in deal activity towards the end of 2024, as businesses sought to mitigate potential tax changes. 

This momentum is likely to carry into the early months of 2025, with more activity expected ahead of the March increases in entrepreneurs’ relief. However, as with any peak, we must remain vigilant about any impact this could have on deal flow later in the year. 

Geopolitical factors are another wildcard. A second Trump presidency, for instance could have significant implications for global markets, including Welsh businesses. The indications are that we will see deregulation in areas like cryptocurrency, which could benefit Wales’ fintech ecosystem. Conversely, the introduction of tariffs or changes in trade policy could pose challenges for businesses relying on exports to the US. 

On the technology front, 2025 promises to be a year where artificial intelligence continues to reshape industries. While much of the focus has been on the AI-driven startups, the real opportunity lies in how businesses – regardless of sector – leverage AI to improve productivity and profitability. Automating processes, enhancing customer engagement, and optimising operations are all areas where AI can deliver tangible benefits. 

That said, it’s essential to remain grounded. There’s a risk of falling into the same speculative bubble that accompanied the dot-com era, where businesses attach the term “AI” to themselves without a substantive foundation. Investors and businesses alike must exercise diligence, ensuring that the technologies they adopt or fund are built on robust data and clear value propositions. 

In the broader context, the focus on sustainability and environmental, social, and governance (ESG) principles will continue to shape investment decisions. Welsh businesses have an opportunity to lead in these areas, particularly with the UK Government’s support for innovation and Freeports, as well as the ongoing development of investment zones in North and South Wales. 

Ultimately, the message for 2025 is clear: while challenges remain, the opportunities for growth and investment in Wales are substantial. With a strong foundation, strategic use of emerging technologies, and an eye on sustainable practices, businesses in Wales have every reason to look to the year ahead with confidence.