Businesses in Wales are growing in confidence and are looking ahead to 2026 with ‘cautious optimism’, says Cardiff-based corporate lawyer Stewart Knights.
Commenting on the day the latest S&P Global UK Manufacturing Purchasing Managers’ Index (PMI) was released, Stewart, a Partner at Knights, said Welsh businesses have the opportunity to covert ‘tentative recovery into sustainable growth’.
The latest PMI figures, released this morning, showed activity in the manufacturing sector reached its highest level in 14 months in November, while business optimism rose to a nine-month high. The PMI indicator for November reached 50.2, up from 49.7 in October, and is the first reading above the PMI’s neutral 50.0 mark since September 2024.
Stewart Knights, Corporate Partner at Knights, said:
“Wales is beginning to show encouraging signs of recovery. New business start-ups are on the rise and insolvency-related activity is lower than this time last year, suggesting a more confident entrepreneurial environment despite ongoing challenges.
“Regional investment initiatives and infrastructure projects announced in the Autumn Budget, alongside targeted skills programmes, are expected to further support growth. However, labour shortages and wage pressures remain key hurdles for advanced manufacturing and energy transition sectors.
He added that the Autumn Budget ‘reinforces a cautiously optimistic outlook for 2026. Certain elements aim to stimulate capital investment, creating opportunities for technology adoption and productivity gains. Wales will also benefit from targeted support for clean energy and semiconductor sectors’. Stewart added:
“However, fiscal tightening will temper optimism. Reduced writing-down allowances for plant and machinery will raise the overall tax burden and the National Living Wage increase to £12.71 in April 2026 adds further cost pressure. Analysts forecast UK GDP growth of around 1.4% in 2026, with inflation easing towards the Bank of England’s 2% target mid-year, potentially unlocking interest rate cuts and investment appetite.
For Welsh businesses, Stewart suggests, the ‘challenge will be converting this tentative recovery into sustainable growth amid global trade uncertainties and rising costs. Businesses that invest in skills, technology, and supply chain resilience will be best placed to turn this recovery into long-term growth’.
