70% of businesses in Wales “hit by recession”

October 26, 2009 No Comments

A total of 70 per cent of businesses in Wales reported that the global economic downturn has had a negative impact on their organisation, according to the 2009 Enterprise Survey from the Institute of Chartered Accountants in England and Wales.

But the survey showed that the negative impact among Welsh business was the lowest among the regions and countries of the UK – eight per cent below average. At 70 per cent it was two per cent up on the position in 2008.

It paints a detailed picture of how UK businesses of all sizes, in all regions and all sectors – as well as their counterparts across the globe – have felt the impact of the world recession.

Wales have reported less of a negative impact than in other parts of the UK

David Lermon, Wales director of ICAEW, said: “There’s no doubt that Welsh businesses, alongside other UK businesses, have had a tough time over the past year. While businesses in Wales have reported less of a negative impact than in other parts of the UK, the situation is still very tough. It is clear that many businesses here feel that they will continue to be impacted by the economic problems for the next one to two years.”

Like others, businesses in Wales affected most commonly expected the impact of the downturn to affect their organisation for another one to two years (48%), with 34% expecting an earlier end.

A total of 64% of businesses in Wales expect the credit crunch/downturn to impact negatively on their business in 2009, in line with other UK businesses. They were also much in line with the UK average in terms of the perceived impact of changes in consumer demand (49%), in global commodity prices (34%) and in exchange rates on their 2009 business (35%).

Despite the obvious impact of the economic downturn, most UK businesses still have plans to grow turnover in the next two years, although growth expectations have generally been scaled back. Businesses in Wales are in line with the UK average, with 65% planning annual turnover growth over the next two years, and those planning growth targeting growth of 11.5% p.a. on average.

Significantly more businesses in Wales than average identified increased profitability as their one key business objective (54% vs 42% UK average). Significantly more than average considered increasing

cash balances among their wider objectives (84% vs 71%), although it was no more likely to be seen as their key objective.

Only 50% of Welsh businesses are said to be globally engaged. They are also significantly below average in terms of the proportion with operations or activities outside their home country.

And 60% of businesses surveyed in Wales say that the UK’s regulatory and taxation environment is not business-friendly. As for other UK regions, a small majority of businesses in Wales cite business tax changes (59%), employment tax (57%) and employment legislation (52%) as perceived hindrances to their operation and development. However, these are joined by health and safety regulations, mentioned significantly more frequently than UK average as a hindrance (58% vs 45%).

Business, Cardiff News