Welsh Economy Requires Fundamental Shift in Policy Approach
As Wales approaches a crucial Senedd election in May, economic experts are urging political parties to move beyond traditional strategies and embrace transformative policies that prioritize productivity and entrepreneurship. According to a comprehensive analysis, the next Welsh Government must focus on turning policy into tangible outcomes such as higher productivity, increased wages, and a greater number of growing firms.
Productivity Must Become the Central Economic Goal
The analysis strongly advocates for making productivity the North Star of Welsh economic policy. Every government programme should be subjected to a simple test: how does it raise output per hour, and how will its impact be measured? Programmes that cannot answer these questions should not receive support. Additionally, the publication of a monthly "Welsh economic scoreboard" is recommended to ensure transparency and accountability, as visibility is essential for effective management.
Entrepreneurship as a National Mission
Entrepreneurship must evolve from being a minor mention in economic strategies to becoming a national mission. Building resilience and prosperity in Wales depends on more people starting firms, more businesses surviving the challenging early years, and a significant increase in firms growing into large employers. This requires a dedicated pipeline designed to support founders through the stages of starting, surviving, and scaling their ventures.
Simplifying Business Support and Enhancing Innovation
Wales needs to simplify the business journey by creating a single, effective front door for entrepreneurs, reducing time spent navigating programmes and allowing more focus on building businesses. This could involve integrating the Development Bank of Wales' debt functions into Business Wales to create a seamless journey from diagnosis to support and finance.
Furthermore, the establishment of an Innovation, Growth and Export Agency is proposed, modeled after successful small economies like Finland. This agency would act as an economic actor rather than a grant office, connecting productivity diffusion, commercialisation, and export scaling. It should also manage a £200 million Wales Growth Capital Fund for equity and patient finance, with independent governance and transparent reporting.
Leveraging Universities and Rebuilding Skills Policy
Universities should be recognized as major employers and significant economic actors, with commitments to employer-led placements, innovation diffusion into SMEs, and a robust pipeline for spinout firms. Additionally, Wales must lobby for a fair share of UK research and innovation funding, which could inject hundreds of millions of pounds annually into the Welsh economy.
Skills policy must be rebuilt around jobs and wages rather than enrolments and delivery. This includes employer-led pathways, more apprenticeships aligned to economic missions, short conversion routes into growth roles, and management capability support. A critical, often overlooked barrier is childcare, which should be treated as economic infrastructure to enable higher participation and progression, especially for women.
Infrastructure, Procurement, and Net Zero as Economic Drivers
Scaling businesses requires accessible space, power, and permissions. Fast-tracking employment sites with published targets and a national business premises plan is essential, alongside recognizing the importance of housing to ensure workers can live near job opportunities.
Procurement should be leveraged as a growth policy, with "first customer" routes for SMEs, challenge-led procurement focused on solutions, and a Made in Wales supply-chain deal to break major contracts into SME-accessible lots.
Net zero must be viewed as an economic advantage, with measures prioritised for clear payback, such as large-scale energy efficiency for SMEs, smarter energy management, and targeted support for energy-intensive sectors. Creating "decarbonisation-ready" industrial estates with shared infrastructure can lower costs and enhance competitiveness.
Transforming Tourism and Town Centres
Tourism policy should shift from focusing solely on visitor numbers to designing a high-quality tourism economy that raises incomes. This involves supporting businesses that enhance value per visitor through better accommodation, experiences, food and drink, and attractions that extend the tourist season.
Town centres require an enterprise strategy rather than nostalgia-driven regeneration. Making it easier to start and trade locally through business rates reviews, simplified change-of-use permissions, rapid pop-up and test-trade permissions, time-limited rate relief for new businesses, and "start-up streets" with flexible leases and shared services is crucial.
A Call for Action from Political Parties
As political parties compete for votes, they are urged to abandon repetitive policies and instead build an economy that delivers for the people of Wales. The next government must place Welsh businesses at the heart of every decision, leveraging the devolution dividend to provide them with a competitive advantage and drive sustainable economic growth.
