Economy is stable but not thriving, according to Welsh Chambers of Commerce

Liz Maher, president of the South and Mid Wales Chambers of Commerce. Pics (C) Huw John, Cardiff.

The Welsh economy is showing signs of steady growth, according to the latest Welsh Business Barometer, published today by South & Mid Wales Chambers of Commerce and the West Cheshire & North Wales Chambers of Commerce.

The Welsh Business Barometer for the third quarter (Q3) of 2017 (July – September) shows improving growth in both the UK and export markets, with an increased number of recorded sales and orders. Business confidence has slightly risen, with more companies expecting profits and turnover to increase. The number of firms that have increased their workforce in the last three months has increased more than 20 per cent, along with those planning on expanding their staffing numbers which is up more than 19 per cent.

Concern has, however, been expressed over the number of Welsh businesses that are finding it difficult to recruit staff, mainly owing to the skills gap in Wales and the uncertainty over the future of EU citizens living in the UK.

Commenting on this quarter’s results Liz Maher, president of the South & Mid Wales Chambers of Commerce, said: “It’s good news that the Welsh economy is continuing to grow, particularly with the uncertainty following the general election and regarding Brexit. But the news that so many of our members are finding it difficult to recruit is worrying for future growth prospects.

“The skills gap in Wales has been of concern to the Chamber of Commerce for several years. Yes, we’ve seen Welsh unemployment figures fall over the last year to align with the UK average, but with businesses still wanting to expand, the lack of people with the required skills is preventing them from doing so.”

With more than half of businesses having recruited during the last quarter, 70 per cent of those who responded to the Welsh Business Barometer said they had experienced difficulties sourcing staff with the skills they need. This is the highest the figure has reached since the Welsh Business Barometer results recorded in the period April – June 2015. According the Barometer results for Q3, the biggest recruitment challenge for Welsh businesses is finding skilled manual or technical staff (49 per cent), with a significant number of companies also indicating that they had difficulties in recruiting professional or managerial level staff (42 per cent).

While the Q3 figures reveal a steady increase in business growth and confidence, no two companies are experiencing the same positive results; those that export are taking advantage of the low pound and moving into new markets, while others are finding it challenging. Some of the successful companies have also stated that while they are doing well, they are apprehensive of the businesses within their supply chain that are struggling, as this could have a knock-on effect.

Ms Maher continued: “It is particularly concerning that the roles businesses are struggling to fill are higher paid skilled and managerial roles, as it is the people in these jobs who are the backbone of our manufacturing industries, who will drive forward growth within businesses.

“There is unfortunately no overnight fix to the problem. It takes time to train young people to the required skill level. The Welsh Government’s apprenticeship scheme, which was updated earlier this year, is greatly welcomed and the findings of the Welsh Business Barometer show the need for more apprenticeships, particularly at a higher level.

“What can ease the situation in the short-term, however, is an agreement over the future of EU citizens in the UK. We’ve seen reports over the summer that the number of EU citizens in the UK has started to fall. This is putting additional pressure on businesses in some sectors.”

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 at Dragon Park in Newport’s International Sports Village.