Wales economy growing slowly, says CBI's Emma Watkins

SPTS Technologies in Newport spends £70m a year in the local economy

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The Welsh economy should pick up later this year and that will continue into 2014, the employers' organisation the CBI Wales has predicted.

It said the Welsh economy was slowly growing, while manufacturers have said they were getting more orders.

But it said the Welsh government could do more to help the construction sector by cutting red tape and "spending wisely" the available Treasury money.

The Welsh government was asked to comment but it declined.

The message from the CBI was that the economy was moving from flat to growing, but only a little.

Start Quote

The construction industry across the UK is finding it tough but here in Wales undoubtedly it is even worse”

End Quote Emma Watkins, director CBI Wales

But it warned that unemployment could rise a little with people feeling the pressure as wages lag behind prices.

It has called on the UK government to deliver on promises to get banks lending more and to reduce red tape and help to grow exports.

CBI Wales director Emma Watkins said there were reasons to give an optimistic forecast.

She said: "This recession has gone on a for long time. There are a lot of people who don't yet believe we are are the end of the recession, and indeed we're not.

"But a lot of them say things are OK - not good - but OK, and they do hope things will change.

"Many of our companies in Wales who are doing well are those that export beyond the eurozone, beyond the EU, and they are the ones that are probably the most optimistic here."

Ms Watkins said some firms in Wales were "getting ready for when the growth comes" but widening their pool of customers and investing in skills training for staff.

Analysis

SPTS Technologies

Manufacturers are saying their order books are getting stronger as the year continues.

I've been to SPTS Technologies in Newport, where engineers are making the machines that produce some of the most modern developments in our phones and cars.

The company employs 270 people and their customers are global.

Success here feeds out into the wider economy.

Since a management buy-out two years ago, workers have a share of the profits and the company spends £70m a year in the local economy

While the firm is doing well, employees are all too aware that the wider economy is still fragile.

While most of the CBI Wales report is optimistic it also warns that unemployment may rise before falling again and that since prices are rising faster than wages most household incomes will continue to feel stretched.

She said: "There are companies out there who have got money to invest but they are not confident enough to do it, which is why we are positive with our forecast for this year and next year.

She added that the Welsh government and local authorities could "play their part" by ensuring they spent more on procuring services from Wales-based firms in a sector she estimated was worth £4.3bn.

But she also had a direct criticism of Welsh ministers for the troubles facing Wales' construction industry following the withdrawal of the NewBuy scheme in April.

NewBuy would have enabled people to get high loan-to-value mortgages, and supported the building of 3,000 homes.

'Additional regulations'

Welsh government ministers say the housing industry had withdrawn support after similar, but separate, plans were announced by the UK government.

Ms Watkins said: "The construction industry across the UK is finding it tough but here in Wales undoubtedly it is even worse. There are a couple of reasons for that.

"One of the key reasons is that we haven't seen those pump-priming mechanisms we have seen at the UK level - the incentives to get first-time buyers to buy for example.

"And all of the uncertainty about the Welsh government's NewBuy Cymru scheme does not help. So house builders here are at a disadvantage from England."

Ms Watkins said there were also additional building regulations or lengthy delays within the planning system.

"And that's two areas where the Welsh government really could make a difference if they reformed and actually spent wisely the money they could have from the Treasury."

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