Welsh businesses believe the economy has significant potential to grow over the next three years, but new research suggests many remain unconvinced that Wales is receiving the public investment needed to realise that opportunity.
New findings from the Lloyds Business Barometer show that three quarters (75%) of Welsh business leaders are confident the Welsh economy will grow over the next three years, including 32% who are very confident.
But that optimism sits alongside a much more challenging finding: only 38% of businesses surveyed believe Wales receives its fair share of public investment.
That is the second-lowest figure recorded across the UK and compares with 64% of businesses nationally who believe their own region or nation receives a fair share.
The figures point to a potentially important issue for Wales: business confidence and ambition appear to be present, but firms believe greater investment in the conditions that support growth will be needed to convert that optimism into economic performance.
More than a third (34%) of Welsh businesses believe the Welsh economy will outperform the wider UK economy over the next 12 months, while 29% disagree.
There are also signs that previous investment is already being recognised by businesses.
Almost a quarter (24%) of Welsh firms surveyed said they had witnessed notable growth in the Welsh economy during the previous three years.
Among those businesses, investment in digital infrastructure was the most commonly identified contributor to growth, cited by 38%. Apprenticeship schemes were highlighted by 33%, while 32% pointed to investment in transport and logistics infrastructure.
The findings also provide an indication of where businesses believe the next phase of economic investment should be directed.
Almost half (49%) of Welsh firms identified investment in communities, including town centre regeneration and housing, as an important driver of economic growth over the next three years.
Some 45% pointed to the importance of a local planning system that supports business development and growth.
Investment in Welsh universities, business incubators and research and development was identified by 44%.
Together, the findings suggest Welsh businesses see economic growth as being dependent on more than direct support for individual companies. Housing, communities, planning, skills, infrastructure, universities and innovation are increasingly viewed as interconnected parts of the environment in which businesses invest and expand.
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.”
The contrast with other parts of the UK is particularly pronounced when businesses are asked about the distribution of public investment.
Across the UK, 64% of businesses believe their region receives a fair share.
In London, that rises to 85%.
In Wales, the figure falls to 38%, marginally ahead of Yorkshire and the Humber at 37%.
The survey also reveals substantial differences in expectations about relative economic performance.
While 62% of London businesses expect their economy to outperform the UK over the next 12 months, the equivalent figure is 34% in Wales. This compares with 31% in Scotland and 28% in both the East Midlands and South West.
Despite those differences, confidence in regional economic growth remains widespread across the UK.
Amanda Murphy, CEO 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.”
The Lloyds Business Barometer research surveyed 1,200 businesses across UK regions and sectors.
For Wales, the findings present a clear contrast: confidence in the country's economic potential remains relatively strong, while perceptions of the investment available to support that potential remain considerably weaker.
They also underline where businesses believe attention should now be focused — creating communities that can support economic activity, making planning more supportive of investment and strengthening the universities, research and innovation infrastructure that can help Welsh businesses grow.
