Welsh business leaders have given a mixed reaction to the Chancellor’s Budget with its scattergun approach to tax rises to plug a fiscal black hole created in part by the independent Office for Budget Responsibility revising downwards its productivity forecast with an expected hit to Treasury tax receipts of £16bn in 2029-30.
For Wales she confirmed a number of investments already announced, such as two AI growth zones in Wales, one in the north and the other in south, which will create 8,000 jobs - although the majority will be in the construction of new data centres.
She also referenced that Rolls-Royce will deliver a new generation of smaller modular reactors at Wylfa on Anglesey, which was confirmed earlier this month. What was new was a £10m funding commitment to support the growth of the compound semiconductor cluster in South Wales, which is aiming to employ 6,000 by 2030.
This funding will focus on semiconductor technologies critical to AI and data centres to support innovation, strengthen supply chains, and develop the skills needed for future growth.
The Budget has provided the Welsh Government with £505m in Barnett formula consequentials for it to spend where it sees fit. This consists of £320m in resource funding and £185m in capital funding.
She also announced improvements to rules with regards the Welsh Government’s ability to borrow and carry over its budget into the next financial year.
From 2026-27 the Welsh Government’s annual and cumulative capital borrowing limits, the overall Wales reserve limit and annual resource departmental expenditure limit and capital departmental expenditure limit drawdown limits will all be increased by 10%. And from 2027-28 the improved limits will be increased annually in line with inflation. The government will also provide a temporary waiver of the Wales reserve drawdown limits in 2026-27.
The Chancellor also said the 海角视频 Government recognises the growth potential of the Cardiff Parkway mainline train and integrated business park planned project. Her Budget policy statement said: “The government will work with the Welsh Government and the private sector to develop plans for the delivery and funding of a station to serve the area as soon as possible.”
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Director of CBI Wales Russell Greenslade said: The 海角视频 Government’s growth mission is currently stalled. While the Chancellor has succeeded in creating the fiscal headroom she needed, a scattergun approach to tax risks leaving the economy stuck in neutral.
“Adding national insurance to salary sacrifice pension contributions curtails savings and pushes up the cost of employment. Coming on top of the rise to the National Living Wage, increased employment costs make it even more expensive for employers to offer jobs to young people and jobseekers.
“The government should be commended for protecting capital spending, boosting innovation, sticking with the corporate tax roadmap, and hiring the planning officers business asked for. But business will still rue a missed opportunity to be bold and press on with much needed tax reform, simplification and alignment of incentives to catalyse business investment and job creation.
“With business investment and profitability weaker as a result of these decisions, the government must now double-down on leveraging the experience and expertise of enterprise to find the step-change in economic growth that has proven elusive. One of the biggest things the government can do right now is get round the table with business to find a landing zone on the Employment Rights Bill that works for everyone.
“Support is needed for local supply chains to be integrated into plans for the Wylfa small modular reactor, ensuring the nuclear site delivers on its promise to benefit the north Wales economy and keep Wales’ clean energy ambitions on track. We also welcome the government’s ambitions for the south Wales semi-conductor cluster, AI growth zones and development of the Port Talbot Celtic Freeport site. These will all boost the regions’ ability to attract world leading manufacturing and industrial sectors, as well as skilled jobs.
Joshua Miles, head of FSB Wales, said: "There’s some positive news for Wales through the two AI growth zones, promising over 8,000 jobs, and the 海角视频’s first small modular reactors at Wylfa on Anglesey. However, 海角视频-wide tax rises and ongoing cost pressures risk another tough year ahead for businesses across Wales.”
“The extra £505m and new borrowing flexibilities give Welsh Government the opportunity to help small firms through lower rates and greater investment in infrastructure. It’s crucial that this extra money is used to replicate 海角视频 Government’s decision to permanently lower tax rates for retail, hospitality and leisure (RHL) properties in Wales.”
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“For our SME-dominated economy, free apprenticeships for under-25s will be transformational in building the skilled workforce these growth sectors need, though businesses will be managing the broader impacts of pension and wage cost increases announced today.
“Wales has the investment commitments and strategic focus, but delivery will be key to turning funding announcements into jobs and growth.”
Robert Lloyd Griffiths, director of ICAEW in Wales said: “For a government whose number one ambition is economic growth – and a Chancellor who had the opportunity to go for growth today – this Budget has not provided the confidence boost businesses in Wales urgently need. Rising costs and pressures on cash flow continue to challenge employers across our nation. What businesses need now is clear support, stable conditions, and the confidence to invest.
“Long-term investment is vital for Wales’s future prosperity, but delivery must match ambition. Employers need tangible help, investors need certainty, and businesses need hope. Above all, action is required to ensure the Welsh economy can grow and thrive.”
On business rates in England the Chancellor announced further reductions for small firms in the retail, hospital and leisure sectors, funded by higher rates for the most expensive properties such as warehouses used by large online retailers.
The Welsh Government has yet to clarify its position on business rate reliefs with its budget set to approved.
Head of the Welsh Retail Consortium, Sara Jones, said “This Budget paints a mixed and at times contradictory picture for the retail sector — some long-overdue relief for high-street businesses operating in England, but new financial pressures that threaten to undermine it. Retailers now face an even tougher balancing act as they try to invest, recruit, and keep prices down for customers.
“The standout announcement for retailers was the permanent cut to business rates for most English stores — a reduction of up to 1 or twenty per cent. Attention now turns to the Welsh Budget. Retailers in Wales will be hoping ministers abandon the proposed business rates surtax on medium and larger stores. Pushing ahead with it would leave Welsh retailers and Welsh high streets at a serious competitive disadvantage compared with those stores just across the border, putting future jobs and investment on the line.
“While increases to the National Living Wage were widely expected, the steeper rise in the minimum wage for under-21s risks reducing opportunities for younger workers.
“Ultimately, this Budget delivers clear winners and losers across the sector. The consequences for Welsh consumers will become clearer in the months ahead — but it’s already evident that these measures fall short of what’s needed to ease the inflationary pressures still bearing down on the industry.”
Leader of the Welsh Local Government Association, Andrew Morgan, said: “The Budget shows a welcome recognition of the importance of fairness and strong public services. Ending the two-child benefit cap is a significant step forward that will help thousands of families and tackle child poverty. Councils will also welcome the extra £500m for public services, alongside the £5bn already announced.
“The new fiscal flexibilities for Wales are an important development, giving the Welsh Government greater capacity to plan and invest sustainably which will benefit hard-hit local services.
“Whilst the provisional local government settlement, announced by the Welsh Government this week, provides a degree of stability for council budgets it is still nowhere near enough to addressing the £560m gap faced by local services.
“We look forward to working closely with Welsh Government to ensure this funding enhances the provisional settlement and supports the vital services our communities rely on.”
Senior partner for KPMG in Wales, David Williams, said: “The £505m in additional Barnett formula funding, combined with two new AI growth zones positions Wales at the heart of the 海角视频’s technology future.”
“The £10m investment on semiconductor technologies in South Wales alongside the small modular reactor project in Anglesey back Wales’ existing industrial strengths. With Anglesey Freeport now fully approved and £4.2m for Port Talbot land remediation, there’s a clear infrastructure investment pipeline.
“For our SME-dominated economy, free apprenticeships for under-25s will be transformational in building the skilled workforce these growth sectors need, though businesses will be managing the broader impacts of pension and wage cost increases announced today.
“Wales has the investment commitments and strategic focus, but delivery will be key to turning funding announcements into jobs and growth.”