Business organisations have welcomed elements of the Welsh Government’s 2025-26 Budget while calling for it to go further on support.
The Senedd has approved the Welsh Budget 2025-26, which sets out £26 billion of spending commitments.
The Welsh Government says that includes “substantial” increases across all government departments with more than £3 billion of capital funding allocated to upgrade equipment in the NHS and schools and to build new homes, modernise public transport and support economic growth.
Cabinet Secretary for Finance Mark Drakeford said:
“Passing this budget is a significant moment for Wales – it unlocks a real uplift in funding for the services that matter most to people, after some very tough years.
“We have secured a financial package that will strengthen our NHS, reduce waiting times, support schools and help communities across Wales thrive, making a real difference to people’s lives.”
The Federation of Small Businesses (FSB) welcomed confirmation of rates support, which it described as “essential for small business resilience”.
Ben Cottam, Head of Wales at the FSB, said:
“The Welsh Government's 2025-26 Budget delivers vital business rates relief, including the extension of the 40% relief for retail, leisure, and hospitality businesses, and a 1% cap on the multiplier for all businesses. This support is essential for small business resilience.
“Small businesses have faced unprecedented challenges in recent years, including sustained rising costs, and are now confronting increased National Insurance Contributions and National Living Wage costs in April, which will significantly drive-up employment costs.
“The rates reliefs included in the Budget provide crucial breathing room, allowing businesses to navigate this difficult period.
“However, the Welsh Government must now act with urgency to restore confidence amongst business owners. This includes delivering on their commitment to improve the planning process through strengthening capacity, providing targeted business support for growth, and implementing meaningful reforms to the business rates system that directly benefit smaller businesses. We look forward to working in partnership to achieve this.”
David Chapman, Executive Director of UKHospitality Cymru, said:
“It's positive that the Welsh Government has acted on calls from UKHospitality Cymru and once again extended the 40% relief available to hospitality businesses. With the financial pressures facing the sector, this continued relief is essential.
“However, businesses are under pressure in every area, particularly from changes to employer National Insurance Contributions, wage rises and the looming threat of the Visitor Levy.
“Hospitality has the potential to significantly drive economic growth, if it is backed and invested in, so I would urge the Welsh Government to work with us to realise that potential. That means meaningful reform of the broken business rates system and making significant changes to the Visitor Levy to exclude children and ringfence funds raised to benefit hospitality and tourism.”
The Wales Tourism Alliance also welcomed elements of the Budget but said it wants to see increased investment in visitor infrastructure and promotion of Wales as a tourism destination.
Rowland Rees-Evans, Chair of Wales Tourism Alliance, said:
“The Wales Tourism Alliance welcomes the Welsh Government’s additional funding for health and social care. We also welcome the £1 bus ticket pilot for under 21s. Many young people in Wales start their careers in the tourism and hospitality industry and this initiative will make public transport more accessible and making their earnings go further.
“However, it is disappointing to see tourism still receiving so little financial support from the Welsh Government. As an industry that generates around £3.8 billion annually for the Welsh economy we would like to see the Welsh Government investing more in our visitor infrastructure and promoting Wales as a destination.
“Instead our industry is facing a raft of challenging and costly policies from Cardiff including the minimum 182 days for holiday lets and the proposed visitor levy. We are deeply concerned that the Welsh tourism industry, far from being supported by the Welsh Government, is instead being pushed to the brink.
“The long term effects of these policies, particularly for areas that are reliant on tourism and hospitality employment, could be devastating.”
Sara Jones, Head of the Welsh Retail Consortium, said:
“The Budget’s 1% cap on the increase in the non-domestic rates multiplier recognises the huge burden this outdated tax has on business. Whilst the increase is below inflation it will, however, continue to place a significant burden on the retail industry and requires a fundamental overhaul. The multiplier is at a 25-year high and remains higher in Wales than in England and Scotland, acting as a significant barrier to investment, jobs and growth.
“The wider outlook remains ominous for the retail sector given the colossal increase in employer national insurance contributions that will come into effect in April, disproportionately impacting the industry which has seen sales flatline over the last 12 months.”
Carolyn Brownell, Executive Director of business improvement district FOR Cardiff, said:
“The Welsh Government Budget comes at a challenging time for many businesses and high streets.
“FOR Cardiff has previously called for the reintroduction of a higher level of business rates relief for the retail and hospitality sectors and whilst this is not forthcoming it is pleasing to see the retained business rates relief for retail, hospitality and leisure. We hope that when they become available Welsh Government will use its discretionary powers from the Local Government Finance Act (2024) to support business in high street locations with their disproportionate rates burden.
“Outside of the scope of Welsh Government, the coming increased pressure of employers’ national insurance contributions will particularly impact sectors such as hospitality that require high staffing levels. The impact of these changes is likely to be felt on high streets across Wales and we encourage Welsh Government to mitigate these impacts wherever possible.”
