We Survived 2025. Now Wales Needs Bold Action

Wales weathered a turbulent year of global shocks, domestic pressures and rapid technological change. But survival is no longer enough.

With a Senedd election ahead and major opportunities emerging in AI, clean energy and advanced manufacturing, 2026 demands ambition, clarity and decisive leadership.

A year of headwinds and quiet progress

As 2025 draws to a close, it is clear this has been a year shaped by fast-moving global events and underlying economic challenges at home. Yet Wales has shown a quiet resilience throughout. From boardrooms and business parks to high streets and village halls, people have been adapting to rising costs, shifting political conditions and rapid technological change. Many hoped 2025 would mark the start of a steadier period. It was not quite the return to stability they expected, but it has been a year that revealed important strengths and signposted where real opportunities may lie in 2026 and beyond. As we reach the end of the year, it is worth pausing to ask what shaped the Welsh economy, and what we might expect in the year ahead.

International pressures that will define 2026

As Wales heads toward its own Senedd election in 2026, it does so against a turbulent global backdrop. Across the Atlantic, the United States will hold pivotal midterm elections in November, determining the level of constraint on the Trump administration and influencing America’s direction on trade, fiscal policy and regulation. For Wales, this matters. The US is a major trading partner, a driver of global financial conditions and the home of the technology giants investing billions in AI infrastructure. Shifts in US policy can quickly alter the wider economic climate that Welsh firms must navigate.

Foreign-policy analysts disagree on what comes next. Some see a new cold war emerging between the United States and China; others expect a world divided into American, Russian and Chinese spheres of influence. The outlook may be more pragmatic. President Trump often acts transactionally, and the old rules-based order is likely to weaken further. In its place, smaller “coalitions of the willing” may form, with countries working together on practical agreements in areas such as defence, trade and climate. For Wales, this means operating in an environment where alliances are flexible and economic conditions can shift with little notice.

There was at least some relief in trade this year. Early fears of a 1930s-style tariff spiral did not materialise. Retaliation was limited, countries negotiated carve-outs and importers absorbed much of the cost. The disruption was real, but a global crisis was avoided, a welcome outcome for sectors such as aerospace, manufacturing and food production. It gives Welsh businesses a little more certainty as they look ahead to 2026.

Fiscal challenges but expanding industrial horizons

At home, domestic economic pressures remained challenging. Many households continue to feel the squeeze of frozen tax thresholds, rising living costs and constrained public spending. The UK Budget offered little in the way of support for economic growth. Rather than setting out a bold plan for investment or productivity, it largely maintained existing commitments and left many departments facing another year of difficult choices. For Wales, this means continued pressure on public services and a need to prioritise carefully where limited resources can have the greatest impact.

Industrial strategy, however, did re-emerge in Westminster this year. The renewed focus on long-term sector priorities — from advanced manufacturing and semiconductors to renewable energy and defence — aligns closely with Wales’ strengths. The challenge for 2026 will be ensuring Wales is not only included in the UK-wide approach but positioned to lead in areas such as AI, clean energy, aerospace and the foundational economy. Wales enters the year with promising assets and capabilities, but translating this potential into growth will require genuine partnership and coordinated action across the whole economy.

Energy policy also took a significant step forward, with the UK Government confirming that Small Modular Reactors will be developed on Anglesey. This is a once-in-a-generation opportunity for North Wales, not only as an energy project but as a catalyst for manufacturing, supply chains, skills development and long-term economic renewal.

Technology’s promise and deepening inequalities risks

The technological transformations of 2025 have also set the stage for an important year ahead. After several years in which generative-AI tools captured global attention, the focus is now shifting to how AI will reshape economies and labour markets. Technology firms invested heavily in data-centre infrastructure in 2025, and some estimates suggest global AI-related capital spending could reach seven trillion dollars by the end of the decade.

Wales is well positioned to benefit. The announcement of AI Growth Zones, including a major Anglesey site expected to unlock thousands of jobs and billions in investment, highlights the scale of the opportunity if Wales can move decisively. Combined with the SMR programme, Anglesey is emerging as one of the most strategically important regions of the Welsh economy.

But technological change also brings challenges. The benefits of AI and automation will not be evenly distributed. Higher-skilled workers and digitally advanced firms are likely to capture early gains, while others may struggle to adapt. Without effective policy, there is a risk that technological progress could widen existing divides between sectors, regions and households. The task for 2026 will be ensuring that innovation supports broad-based prosperity by helping firms adopt new technologies, enabling workers to retrain quickly and ensuring that the benefits of investment flow into Welsh communities.

The choices in 2026 will shape the decade ahead

As we look ahead to 2026, Wales enters a year of uncertainty and possibility. Global conditions remain fragile, and tight public finances and long-standing structural challenges will continue to shape domestic choices. A new Welsh Government will face three broad tasks: maintaining economic stability in a period of limited fiscal headroom; helping workers and firms adapt to accelerating technological change; and positioning Wales confidently within a rapidly evolving UK and global economy. These are demanding challenges, but they are also areas where clarity and ambition can make a meaningful difference.

If 2025 was a year where decades seemed to happen in weeks, 2026 will be the year Wales decides how to respond. The choices made in Cardiff Bay, and how Wales positions itself within a rapidly changing world, will determine whether the next decade is one of resilience, renewal and shared prosperity.