Welsh businesses working through uncertainty despite continuing post-referendum economic slowdown

Heather Myers, director of the South and Mid Wales Chambers of Commerce. Pics (C) Huw John, Cardiff.

The economic slowdown experienced immediately after the EU referendum has continued but Welsh businesses are adapting and planning for a post-Brexit future, according to the latest results from the Welsh Business Barometer.

The findings of the Welsh Business Barometer for Q4 2016, released by the South Wales, Mid Wales and West Cheshire & North Wales Chambers of Commerce, suggest the economy in Wales is still growing, with more businesses reporting their sales are increasing than decreasing and more businesses stating that they are increasing their workforce than decreasing it.

However the gap between these figures is closing, leading to concern that the slowdown experienced following the Brexit referendum result is continuing.

“There is no doubt that the decision to leave the European Union has already had a significant impact on the economy,” said Heather Myers, director of the South and Mid Wales Chambers of Commerce. “But we have excellent businesses here in Wales, businesses that are adapting to the situation and preparing for a bold future outside the EU.

“If businesses are to remain positive, more guidance must be given by the government so that the Welsh economy can flourish after life in the EU, and that Wales can continue on its journey to becoming a prosperous nation.”

The Welsh Business Barometer is an independent survey of business performance and confidence, which acts as an early indicator of the future economy in Wales. The latest findings were presented to businesses across Wales this morning (Thursday 12 January) at the Wales Air Ambulance Ty Elusen base in Llanelli.

Areas of concern for the Welsh economy include the number of businesses who are predicting a fall in profits during 2017, with 28.9% expecting their profits to drop in the next 12 months, a 5.6% increase on Q3’s results that followed the EU referendum.

In addition, the number of employers experiencing difficulties in recruiting was 4.49% higher in Q4 than in Q3, as Welsh businesses in a range of sectors continue to face a skills gap.

One business that has felt the effects of the recruitment challenge is Maesteg-based Siderise Group, an international provider of specialist fire and acoustic insulation materials for the construction industry.

“Brexit caused a great deal of uncertainty within the construction industry and we predicted that the UK markets would slow as a result”, said Steve Swales, chief commercial officer at Siderise.

“Thankfully this wasn’t the case for us and we are continuing to anticipate growth from 15% to 20% over the next 12 months, but to sustain this we need to recruit the right people with the right skills. This is something that we have found increasingly difficult over the past three months and it has not only affected our south Wales operations but those across the UK.

“For Siderise, investing in training and skills development is becoming more vital than ever so that we can address the ongoing skills gap during an uncertain period of time and continue to grow as a business.”

Ms Myers said: “The high proportion of businesses struggling to recruit the right staff has been a consistent theme of our Welsh Business Barometer. The development of the new school curriculum and future skills needs is underway but efforts need to be boosted this year to avoid a whole generation of Welsh workers lagging behind counterparts in other countries, which will hinder our economy.”

Despite this, the findings also suggest plenty of reasons to remain positive about Welsh business in 2017. In the last three months of 2016, 32.4% of businesses reported increased export sales compared to 22.1% reporting decreased sales. This is a positive difference of 10.34%, down 1.87 percentage points from the previous quarter. In addition, 32.1% of businesses reported increased export orders compared to 23.1% reporting a decrease in orders. This is a positive difference of 8.96%, down 1.22 percentage points from the previous quarter.

“Overall, our findings suggest growth will continue in 2017, albeit at a more modest pace, and it seems that businesses are doing their best to trade through the uncertainty and seize opportunities as they arise,” said Ms Myers. “But we need clarity on the UK government’s Brexit negotiations or we run the risk of this slowdown turning negative in the medium term. Welsh businesses need to know what the plan is.

“They will also need support to help them through this year, whether financial or with help in accessing new markets in the UK or beyond. We need to show the world that Wales is open for business.”