As the political environment settles, rates begin to ease, and inflation slows, we expect to see businesses across Wales respond with increased optimism and intention to invest.
Joint Heads of Mid Corporate, Wales, Barclays Corporate Banking
61% surveyed say they’re making headway or have achieved their goals in developing their business.
35% of respondents feel that rules and regulations are the biggest barrier to expansion.
57% of businesses surveyed in Wales say increased costs is their biggest business issue.
According to our recent research carried out in conjunction with News UK*, 47% of respondents surveyed across Wales are confident in their ability to grow their business – although this is somewhat lower than the UK average of 55%. The same percentage are confident in their ability to access funds to support growth, but only 39% say they have confidence in the overall UK market.
Businesses in Wales say they are most worried about an increase in costs (57%), followed by concerns regarding recruiting and retaining staff (49%).
Just over half (55%) of respondents in Wales have plans to expand in the next 12 months. While business leaders across the wider UK say a lack of access to finance is their most common reason for not expanding, Welsh business leaders cited rules and regulations (35%) as the most common expansion barrier.
Encouragingly, 61% of businesses surveyed in Wales are making headway or have achieved their goals in developing their business more broadly through technological innovations or diversification, and 51% plan to invest in new strategies over the next 18 months to 2 years.
Following several years of uncertainty and increasing costs, businesses are hopeful that the new government will bring about stability and investment. That said, there may be some initial reticence while businesses wait to see what changes and new policies are introduced. For example, will changes be made to the Freeport programme, which offers opportunities to harness Wales’s economic potential, encourage investment and promote job creation? Attracting inward investment and policies that support increased economic activity and productivity will be key to long-term growth in the region.
Joint Head of Mid Corporate, Wales, Barclays Corporate Banking
With talent recruitment and retention being a key factor in business performance and growth, it’s great to see that nine out of ten businesses believe developing staff skills to meet future needs is a priority, and that three quarters have staff development programmes in place.
“Finding ways to attract and retain staff is key to business success. Aside from implementing staff development and training programmes, businesses may also want to focus on employee wellbeing, career progression and offering the right staff benefits,” say Greer.
Our conversations with clients suggest that the recruitment challenge may be starting to ease across the region. Continued investment in non-traditional industries, such as ESG projects and emerging technologies, requires different skill sets, which could bring about new opportunities. Welsh businesses can also benefit from the ongoing hybrid working trend and increased focus on lifestyle choices, which are enabling more people to stay in, or move to, Wales.
Joint Head of Mid Corporate, Wales, Barclays Corporate Banking
64% of respondents are using data to make better choices.
65% of businesses surveyed have started or completed digital transformation programmes.
58% of those surveyed are embracing digital transformation through remote working.
By streamlining operations, promoting cost efficiencies, and driving innovation, digitalisation is a key enabler of business growth and success. Business leaders questioned in Wales appear to agree, with eight out of ten identifying digital transformation as a growth priority.
Just over half (51%) of business respondents say they’re currently implementing digital transformation programmes – 14% have completed theirs (double the national average). Two thirds (64%) of Welsh companies are using data to make better choices (above the national average of 58%), 58% for remote working, and 52% to improved customer service using digital tool(s).
Many Welsh businesses appreciate the importance of technology. It’s no surprise therefore that a high percentage (73%) of the businesses questioned say they understand the role data can play in responding to consumer behaviours and improving user experiences – and 67% feel that their business is equipped to do this.
With artificial intelligence (AI) emerging as a potential key facilitator for business growth in the future, Wales is again ahead of the national average, with 18% of businesses surveyed reporting already using AI. Those who haven’t yet implemented AI may want to start thinking about the role it could play in their business and strategic decision-making. This includes working out how to overcome the primary barriers identified by our research: employee skills gaps (27%), not understanding AI’s benefits (25%), and not seeing it as a business priority (25%).
The tech sector in Wales is continuing to grow rapidly, and it’s good to see companies working to make the most of opportunities in digital transformation, artificial intelligence, and other emerging technologies. Their resilience is proving its worth in a challenging funding environment. Equity investment grew by 8.74% in 2023, which compares favourably to the collective national drop of 27.2%**.
Joint Head of Mid Corporate, Wales, Barclays Corporate Banking
Only 39% of those surveyed in Wales say they’re either familiar with, or understand Environment, Social and Governance (ESG) very well, as a business topic – a further 32% say they are aware of it. ESG is a framework that helps businesses understand and measure their impact on society, the environment and how transparent and accountable it is.
With investors, customers, and employees increasingly expecting companies to demonstrate their ESG commitments, it could be an important consideration for all business. Given that 27% of respondents reported never having heard of ESG, this is an area on which business leaders across Wales may want to focus more attention.
Of the 71% that have at least some awareness of ESG, 22% say they have a well-established ESG approach in place; 39% are in the process of developing or implementing their strategies. This is good news: a well-defined strategy aligned with regulatory requirements could help businesses to mitigate risk, enhance their reputations, and strengthen relationships with stakeholders.
Funding is by far the biggest barrier to investing in ESG focused projects for businesses in Wales, according to our survey, with 35% citing a lack of funds to invest (considerably higher than the national average of 23%).
Despite funding concerns, 78% questioned say they are likely to invest in sustainability by reducing their waste over the next two years. Sustainable supply chain management is also a key area of focus for 71% of businesses – more so than nationally, where the average is 61%. What’s more, 69% are likely to invest in employee training on sustainability and 61% in climate technology (technologies that are explicitly focused on reducing GHG emissions or addressing the impacts of global warming). In comparison, only 51% say they are planning to investigate renewable energy.
Please talk to us if your business is looking for ways to finance its sustainability strategy. We’re committed to supporting Welsh businesses with the funding and advice they need to meet this and other challenges. For example, the Barclays Sustainability Academy is supporting clients to help them better understand their ESG journey and to upskill their staff to meet their various needs.
Joint Head of Mid Corporate, Wales, Barclays Corporate Banking
To discuss your business requirements and how Barclays can support you, contact us today.
*Source: YouGov ‘News UK Barclays Survey’ April 2024. An online quantitative survey of 1000 business leaders working in businesses with at least 250 employees. Working in all regions of the UK except London. NB Survey size in Northern Ireland 15 businesses.
**https://labs.uk.barclays/media/l3dkzrvp/tech_in_the_uk_2023_innovation_nation_wales.pdf^
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