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Business

Welsh business confidence ticks higher, but output and employment fall at faster rates

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THE HEADLINE NatWest Wales Business Activity Index – a seasonally adjusted index that measures the month-on-month change in the combined output of the region’s manufacturing and service sectors – registered 48.0 in December, down from 48.5 in November, to signal a modest and quicker drop in output at Welsh businesses. The fall was due to weak client demand, economic uncertainty and a further decrease in new order inflows. The sharper decline in activity in Wales contrasted with the wider UK trend, which indicated a moderate upturn. In fact, Welsh firms recorded the second-fastest drop in output behind the North East of England.

Welsh companies registered a further contraction in new business at the end of 2023, although the rate of decline eased for the second successive month. The continued drop in new orders was linked to subdued demand conditions and customer postponements. The pace of decrease was modest and the slowest since September, though it contrasted with the UK average which indicated a moderate expansion in new business.

Manufacturers and service providers alike in Wales recorded contractions in new orders.

December data signalled an improvement in expectations regarding the outlook for output over the coming year at Welsh firms. The level of optimism reached a five-month high and was stronger than the series average. Companies noted that positive sentiment was due to hopes of a pick up in customer demand, investment in product diversification and facilities, and the acquisition of new clients.

The degree of confidence remained slightly weaker than the UK average, however.

Welsh businesses recorded a fifth consecutive monthly decrease in workforce numbers during December. The rate of job shedding accelerated to the joint-fastest in over three years and was by far the strongest of the 12 monitored UK areas. Weak customer demand led firms to reduce staffing numbers, with redundancies mentioned by panellists.

Employment fell at Welsh manufacturers and service sector firms.

Businesses in Wales indicated another monthly decline in backlogs of work in December. The drop in the level of outstanding business was marked overall and sharper than the UK trend. Firms highlighted that lower new order inflows enabled them to process incomplete work. Nonetheless, the pace of reduction slowed to the weakest in seven months.

Average input costs faced by Welsh firms increased at a quicker pace at the end of 2023. The rise in input prices was attributed to greater raw material and component costs.

Although sharp, the rate of cost inflation was slower than the series average and the trend seen across the UK as a whole. In fact, of the 12 monitored UK areas, only the West Midlands, North East and Northern Ireland recorded slower upticks in operating expenses.

Welsh firms registered a sharper rise in output charges during December, with the rate of inflation picking up to the fastest since August. Anecdotal evidence stated that higher selling prices were due to the pass through of greater costs to customers.

In line with the trend for input costs, the pace of increase in output charges was slower than the UK average, with only Northern Ireland, the North East and the North West recording weaker upticks in selling prices.

Jessica Shipman, Chair, NatWest Cymru Regional Board, told The Pembrokeshire Herald: “The final month of the year signalled more upbeat sentiment among Welsh firms regarding activity in 2024 as business expectations were the strongest since July, despite output and new orders continuing to contract. Companies anticipated that more accommodative demand conditions and investment in new products and facilities would drive output in the year ahead.

“Although the pace of decrease in new business slowed, reduced backlogs of work led to dwindling activity and the joint-fastest drop in employment since October 2020 as business requirements waned further.

“Meanwhile, rates of inflation remained sticky as input costs and output charges rose at faster paces. Sharper hikes in component and raw material costs were passed through to customers despite a challenging demand environment. Nonetheless, rates of increase were among the weakest in around three years and much slower than the 2023 average as inflationary pressures eased substantially from the start of the year.”

Business

New creative space aims to help revitalise Haverfordwest town centre

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A FRESH initiative is bringing a creative spark to Haverfordwest’s high street, with the opening of a new shared studio space designed to support local artists and breathe life into empty shops.

Breakout Gallery, led by Arthur Brooker, officially opened its doors to the public on Friday, February 14, offering both a workspace and a platform for artists to showcase their work.

Arthur, who has been running Breakout Gallery for nearly a decade, has shifted the focus of the business in response to changing times.

“We initially specialised in selling artwork on commission,” Arthur explained. “But after COVID and the cost-of-living crisis, we needed to rethink our approach. Now, our main goal is to help regenerate Haverfordwest by transforming vacant retail spaces into hubs of creativity.”

The gallery has been redesigned to include individual studio units, allowing artists to rent space to create and exhibit their work.

Beyond the studio, Breakout Gallery is well known for its street exhibitions, which add a vibrant touch to local festivals and events. The team also rents out event decorations and manages a space at Westival.

Arthur is now setting his sights on further expansion. “There’s so much potential in Haverfordwest,” he said. “We’re already exploring another premises to offer even more creative space. It’s all about revitalising the town, one shop at a time.”

In addition to providing studio space, the gallery hosts exhibitions and events, with the next major showcase, Heartbreak Hotel by Harriet Davis, set to open on Friday, February 28. Life drawing and oil painting classes are also being introduced to further engage the local artistic community.

A former director at Haverhub, Arthur is passionate about bringing more artists into the fold and ensuring that Haverfordwest becomes a thriving creative hub.

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Business

Insolvency figures rise as businesses face growing pressures

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CORPORATE INSOLVENCIES increased in England and Wales by 6.4% in January 2025, reaching 1,971 cases compared to December 2024’s total of 1,852. The figure also marks a 10.7% rise from January 2024’s 1,780 cases and a 13.1% increase from January 2023.

Personal insolvencies, meanwhile, dropped by 3.4% in January 2025 to 9,706, down from 10,045 in December. However, this remains 11.6% higher than January 2024’s figure of 8,698 and 12.5% higher than January 2023’s 8,630.

Rising costs drive business closures

Bethan Evans, Wales Chair of R3, the UK’s insolvency and restructuring trade body, said the rise in corporate insolvencies is largely due to an increase in Creditors’ Voluntary Liquidations and Administrations.

She said: “This suggests that many directors are opting to close their businesses after years of tough trading conditions, particularly ahead of the upcoming rise in the National Minimum Wage and Employers’ National Insurance Contributions in April. As a result, corporate insolvencies have hit their highest January level in over five years.

“There is some positive news in the form of increased Administration numbers, which suggests that more companies may be rescued through sales out of Administration.”

Evans added that creditor pressures and ongoing costs remain key factors driving insolvencies, as rising expenses and reduced consumer spending continue to take a toll.

“Creditors have largely abandoned the more lenient approach they took post-pandemic, with HMRC now returning to pre-COVID levels of debt collection,” she said.

Sectors including retail, construction, and hospitality have struggled. While retailers saw an increase in sales during the festive season, Evans noted that much of this was driven by discounts rather than sustained consumer demand. The construction sector has been hit by rising costs and client caution, while hospitality businesses failed to see the Christmas revenue boost they had hoped for.

Looking ahead, she said: “The projected cut in economic growth has affected business confidence, with many firms hesitant to invest in expansion or hiring ahead of April’s wage and tax changes. However, the Bank of England’s decision to cut the base interest rate could help improve access to rescue finance.”

Household debt remains a concern

On personal insolvencies, Evans pointed to a rise in Debt Relief Orders (DROs), attributing this to changes in debt thresholds and the removal of administration fees last year.

“Breathing Space numbers are at their highest in a year, reinforcing the fact that household debt remains a serious issue in England and Wales,” she said.

“With winter costs for heating and food still high, financial worries are mounting. Many people are keeping a close watch on their outgoings and remain uncertain about their financial future.”

She urged those struggling with debt to seek help early.

“Discussing financial problems—whether personal or business-related—can be difficult, but seeking advice early often provides more options. Most R3 members in Wales offer free initial consultations to help people understand their financial situation and explore potential solutions.”

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Business

Special meeting to decide new £2.3m holiday development at deer park

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PLANS for £2.3m disability-friendly holiday lodges at a Pembrokeshire deer park attraction have been backed for a second time, but a final decision will have to be made by full council.

In an application recommended for refusal at the February 18 meeting of Pembrokeshire County council’s planning committee, Mr and Mrs Evans are seeking permission for 15 lodges at Great Wedlock, Gumfreston, near Tenby, the site of a 176-acre deer farm attraction, which includes animals from the late Queen’s estate, and a more recently-granted market traders’ barn.

The application had previously been recommended for refusal at the January meeting, but members went against officer recommendations with a ‘minded to’ approval, meaning the scheme returned to the February meeting after a ‘cooling off period’.

Reasons for refusal given to members included it was outside of an identified settlement boundary in a countryside location, and was considered to have an adverse impact on visual amenity.

The applicants have previously said build costs to complete the development would be circa £2.3m.

St Florence Community Council did not support a previous application, but has supported the latest amended scheme.

At the February meeting, officers repeated their concerns, also raising a recent court judgement against the council for a previously-granted holiday park scheme in Stepaside, which had been backed despite repeated calls by officers for its refusal, saying there was a possibility of a similar situation arising.

Applicant Andrew Evans thanked members for their previous support for the scheme, saying it would be “completely unique to Pembrokeshire,” providing a facility “for those less fortunate than ourselves,” adding: “Persons with disabilities can come and stay and be one of the majority, and not the minority.”

He said issues on visual intrusion had been addressed by screening which had already cost some £2,000, saying: “The only way you’d see this development is from a helicopter.”

Mr Evans told members some £2.3m was being sunk into the scheme, estimating an annual £1.5m spend in the county when wages, visitor expenditure and other factors were taken into account.

He said, if full approval was given, the first builds could be up-and-running this year, with all finished by February 2026.

Tenby-born Mr Evans quoted a recently-submitted Network Rail scheme to the national park to improve disability access at the town’s railway station, adding: “We’re going for something that no-one else caters for; 24 per cent of people suffer a disability.”

Local member, Cllr Rhys Jordan called once again for the scheme to be supported, saying the recent judgement of the Heritage Park scheme was “a different set of circumstances,” with the likelihood of a judicial review on an application that had “not received one objection” and was supported by the local community council “slim to none”.

Councillor Alan Dennison, who moved approval, seconded by Cllr Jordan, said: “With respect to the recent court case, everyone supports this.”

Concerns were raised by councillors Brian Hall and Alistair Cameron, the former warning it could “open the door” for applications previously refused.

Members voted nine in favour to five against supporting the scheme.

This second approval against officer recommendations based on policy means the final decision on the scheme will have to be made by full council, the matter expected to be heard at the March meeting.

The applicants’ previous scheme for a trading barn took an identical route, being decided by full council after repeatedly being recommended for refusal.

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