Business leaders across Wales have delivered a mixed verdict on the UK Government's latest Budget, welcoming strategic investments but expressing deep concern over a "scattergun approach" to tax rises.
Strategic Investments for Wales
The Chancellor confirmed several major investments for Wales, including the creation of two AI growth zones, one in the north and another in the south. These are projected to create 8,000 new jobs, with the majority expected to be in the construction of new data centres.
She also referenced the previously announced Rolls-Royce project to deliver a new generation of smaller modular reactors at Wylfa on Anglesey.
A new commitment of £10 million was unveiled to support the growth of the compound semiconductor cluster in South Wales, which aims to employ 6,000 people by 2030. This funding will focus on semiconductor technologies critical to AI and data centres.
Financial Flexibilities and Funding
The Budget has provided the Welsh Government with £505 million in Barnett formula consequentials, consisting of £320 million in resource funding and £185 million in capital funding.
Significant new fiscal flexibilities were also announced. From 2026-27, the Welsh Government’s annual and cumulative capital borrowing limits, the overall Wales reserve limit, and annual resource and capital departmental expenditure limit drawdown limits will all be increased by 10%. From 2027-28, these improved limits will be increased annually in line with inflation.
The UK Government also recognised the growth potential of the Cardiff Parkway mainline train and integrated business park, pledging to work with the Welsh Government and private sector to develop delivery plans.
Business Leaders Voice Concerns
Russell Greenslade, Director of CBI Wales, stated that while the government protected capital spending and boosted innovation, its approach to tax risks leaving the economy "stuck in neutral". He highlighted that adding national insurance to salary sacrifice pension contributions "curtails savings and pushes up the cost of employment".
Joshua Miles, Head of FSB Wales, noted the positive news on AI zones and nuclear reactors but warned that "UK-wide tax rises and ongoing cost pressures risk another tough year ahead for businesses across Wales". He urged the Welsh Government to use its extra funding to permanently lower business rates for retail, hospitality, and leisure properties.
Robert Lloyd Griffiths, Director of ICAEW in Wales, said the Budget "has not provided the confidence boost businesses in Wales urgently need," emphasising that employers require clear support and stable conditions to invest.
Sara Jones, Head of the Welsh Retail Consortium, highlighted the competitive disadvantage Welsh retailers could face if the proposed business rates surtax on medium and larger stores proceeds, unlike the permanent cuts announced for England.
Despite the concerns, David Williams, Senior Partner for KPMG in Wales, struck a more optimistic note, stating that the investments "position Wales at the heart of the UK’s technology future".
