30 March 2011 Last updated at 05:01 ET

Experian warns of slower Welsh recovery from recession

It is predicted the Welsh economy will grow at an average of 1.6% a year in the next decade

The Welsh economy is recovering from the recession slower than the rest of the UK, a report warns.

It says Wales is vulnerable to public spending cuts and has entrenched problems like "worklessness".

Welsh Secretary Cheryl Gillan said the Budget was part of the solution.

Labour accused the UK government of talking down the Welsh economy, the Liberal Democrats said the report was "no surprise" and Plaid Cymru said it had warned of the cuts' impact.

David Rosser, director of CBI Wales, said that despite the report's findings, many businesses in Wales were seeing an improvement.

The report, prepared for the UK government, said the nation's share of the economy will also fall, made worse by a reliance on the public sector.

The research cited low skills and entrepreneurism and low opportunities.

The report was presented to a business advisory group chaired by Mrs Gillan.

The report forecast growth at an average of 1.6% per year over the next decade compared to 2.2% across the UK and said as Wales "fails to keep pace" its share of the UK economy will diminish from 3.5% in 2010 to 3.2% in 2025.

Comparing Wales to England
Challenges	Opportunities
Source: Experian Public Sector Report
Lower levels of entrepreneurism	More affordable office space
Fewer foreign-owned business	More affordable labour
Lower export rate	Higher proportion of adaptive firms
Lower economic activity rate	Quality of place
Higher claimant rates
Unskilled workers

Report authors said the slow recovery would be exacerbated by a reliance on the public sector which employs almost one in three in Wales.

Other challenges include lower entrepreneurism and lower business start-up rates, fewer foreign-owned businesses and fewer businesses exporting than England.

But it highlights more affordable office space and labour and fewer households vulnerable to long-term unemployment and above average growth in sectors such as mechanical engineering, metals, minerals and chemicals and business services.

In the short-term, retailing, hotels and catering would continue to struggle and construction would remain vulnerable.

Adam Swash, head of strategy and research for Experian Public Sector which conducted the research, said Wales needed to boost exports.

"One of the weaknesses of Wales is its low export rate," he said.

"We are currently calling this a challenge, but it's an opportunity as well if mechanisms can be found for Wales to start exporting.

"There are lots of opportunities for it to try to capitalise on to try and get some growth."'

He said both public and private investment was needed, but warned: "The public purse is fairly bare."

Cheryl Gillan said the research "shows the scale of the problem we inherited and also the opportunities available as we set to rebalance the Welsh economy".

"I believe the Budget announced by the Chancellor last week is part of the solution," she added.

A Welsh Labour spokesman said: "It serves the Tory-led government very well to be talking Wales down on the eve of the assembly election campaign.

"People in Wales are not looking for analysis from Cheryl Gillan, they are looking for answers."

Plaid said it was the only party "coming up with creative, radical and innovative ideas to tackle the problems that the nation faces".

'Prospects'

And the Liberal Democrats' Jenny Randerson said the coalition assembly government between Labour and Plaid had "spent more money on economic development than anywhere else in the UK and we are now the poorest region - and we're falling further behind".

CBI Wales boss Mr Rosses told Radio Wales: "I think we need to draw a distinction between how businesses are doing in Wales and how the economy is doing.

"Everything I hear from business is that they are doing just about as well as businesses across the rest of the UK. We probably just don't have enough of them for the size of the economy we've got.

"And that's why these figures, which look at the prospects of the overall economy suggest that we're going to grow more slowly."