There were more business deaths than births in Wales at the start of 2023 as companies grappled with tough trading conditions. A newly published report found there were 2,875 business births and 3,620 business deaths during 2023 Q1 as the gap between the number of companies opening and closing widens.
The fifth annual report, published by Economic Intelligence Wales, analyses economic trends in Wales in the 2022/23 financial year as well as providing insight into the health of the Welsh economy. It comes as Welsh firms faced a difficult year of trading amid high interest rates and inflation which impacted consumer spending and demand.
There has also been an increase in the number of Welsh SMEs in the highest risk credit rating category in June 2023 at 5.2%, up from 4.8% in the previous year. While the number of registered company insolvencies in Wales and England hit its highest level of the past four years, jumping to 2,552 in May 2023.
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County Court judgements were up 15% to 264,000 in Q1 2023 when compared with 2022 Q1. However, despite tough economic conditions, the report found firms in Wales were showing resilience as they looked to make more investments and increase workforce numbers.
It also identified a sharp rise in the nominal value of Welsh exports which increased by more than a quarter to £20.8bn across the last financial year.
In terms of financial support for Welsh firms, the report found that the Development Bank of Wales completed 516 investments in 2022/23, at a total value of £124m and creating or safeguarding 3,500 jobs.
Over 61% of these investments were accounted for by loans and equity, with the remaining 39% linked to property development investments. In total, 18% of the value invested in 2022/23 related to equity investments at nearly £23m following a strong performance in the second half of the year.
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Around 42% of the total value of investments were made to firms located in south east Wales, with firms in mid- and south-Wales receiving 34% of the investment value and north Wales at 24%.
Development Bank chief executive Giles Thorley said: “The last financial year was a turbulent one for businesses across Wales, but many have continued to show their entrepreneurial spirit and there are causes for cautious optimism throughout the Welsh business sphere.
“This report provides very useful insights into how wider economic conditions have impacted on Welsh businesses and Welsh finance, and gives us at the Development Bank of Wales an improved understanding of the role we play within those areas, allowing us to make better-informed decisions about our products and how we work with businesses.”
Professor Max Munday of Cardiff Business School said: “The Annual report reveals business concerns about the high levels of interest, and with the underlying rate of inflation not falling as fast as hoped at the beginning of the year. However, it was encouraging to see some increase in overall business confidence and with labour markets in Wales still showing some resilience.”
Economy Minister Vaughan Gething said: “In these difficult times, businesses in Wales have shown resilience and determination. I’d like to thank Economic Intelligence Wales for the vital insights this report provides and urge businesses to get in touch with the Development Bank of Wales and the Welsh Government’s own agency, Business Wales, for support.”
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