New research from Allica Bank shows autumn in Wales is the second biggest of any UK country or region
Wales has seen a shrinking population of small and medium-sized enterprises (eSMEs), according to new research from Allica Bank.
According to the bank, there were 25,025 eSMEs in Wales in 2023, but this figure has since fallen by 3.4% to 24,170.
The biggest fall was in Bridgend, down 11.7%, followed by Caerphilly, down 8.3%; Swansea, down 4.5%; Blaenau Gwent, down 4.3%; and Pembrokeshire, down 3.2%.
Established SMEs (eSMEs), defined as companies employing between five and 250 people, account for 37% of private sector employment in Wales. This is seven percentage points higher than in London.
While Wales’ eSME population will fall by 3.4% between 2023 and 2026, London’s will increase by 5%. Northern Ireland, at 0.2%, was the only other UK country or region to record growth.
The only part of England that saw a bigger percentage drop than Wales was South West England, down 3.8%. Across the UK, there was a contraction of 0.7%.
Over the longer term, the UK’s eSME population has grown by around 7% over the past decade, but London accounts for 44% of that net growth.
In addition to being important entrepreneurs, these businesses are a key driver of economic growth. Some 425, or 1.8%, of Wales’ eSMEs have grown by 20% or more in the past year, showing that long-standing local businesses can still be an important source of growth and investment.
However, the proportion of high-growth companies among Wales’ eSME population is the lowest of any UK country or region. The highest proportion was recorded in London, at 5.3%.
Allica’s research also shows that the impact of eSME is more pronounced in rural areas. In England, they support an average of 48% of the workforce in rural areas, compared to just 33% in urban areas.
In the UK, 10.7 million people are directly employed in eSMEs.
Conrad Ford, chief strategy officer at Allica Bank, said: “Established businesses are the engine of the Welsh economy. They support careers, create apprenticeships and provide vital services to local communities.
“That’s why the fall in numbers should be so significant. When places like Bridgend and Caerphilly lose established businesses, they lose employers who have often supported their local communities for years.
“We believe that if established SMEs grow, the whole economy will grow. If the UK Government wants to generate good growth in every postcode, these businesses must be more visible in economic policy. Giving local leaders the tools to understand and support established SMEs will be an important step in this process.”