Confidence is the Foundation for Business Growth

Entrepreneurs drive economic growth. Their ideas create jobs, their ambition fuels investment, and their success strengthens communities. Yet too often, the focus of economic policy is on short-term metrics rather than long-term business growth.

In Wales, as elsewhere, we need to do more to support entrepreneurs with a clear vision for scaling their businesses.

At Cornerstone Finance Group, we have our own experience of the opportunities and challenges facing businesses. As a UK-wide company headquartered in Cardiff, we have benefited from the strong talent pool in Wales, with access to graduates from excellent universities. Recruitment has never been a challenge for us, and we have grown quickly as a result. But while the right people are critical to success, businesses also need the right conditions to invest and expand.

Confidence is a key factor in that. Over the past year, we have seen a decline in business confidence among the firms we interact with, particularly following the UK Government’s Budget announcement. Employers are having to factor in rising costs, and for some, this means slowing down recruitment or pausing growth plans altogether. For others, the priority has shifted from financing expansion to securing working capital just to manage the current climate. Debt appetite is being affected – not because businesses don’t want to grow, but because uncertainty is making it harder to plan ahead.

This is where government, both UK and Welsh, has a role to play. We need policies that actively encourage long-term business investment. That means focusing on creating the right conditions so that businesses can scale. It also means ensuring that companies have access to the right financial support to move forward.

One potential step in the right direction is the UK Government’s recent announcement on pension funds. The ability for well-funded, defined benefit pension schemes to invest their surplus funds in businesses could unlock much-needed capital. There is significant potential here – around 75% of these schemes are currently in surplus, and pension funds hold more than £1.1 trillion in assets. If even a fraction of this is channelled into SMEs, it could be a major boost for business investment.

However, the impact of this change will depend on how it is implemented. We need to see the details and assess the risk profile. If it works, this kind of policy could be a game-changer, helping businesses invest in equipment, innovation, and expansion. But we will have to wait to see how effective it is in practice.

Beyond funding, Wales has strengths it can build on. The financial sector has evolved significantly over the past two decades. There is now far less reliance on the big banks, and we have seen organisations like Starling establish operations in Wales, drawn by the quality of the workforce. Initiatives like FinTech Wales are supporting innovation and helping to position Wales as a hub for financial services.

But the missing piece is sustained investment in entrepreneurship. While there is much to celebrate in Welsh business success, we also need to actively ensure that entrepreneurs have the stability, resources, support, and investment they need to succeed.

At a time when confidence is fragile, the focus should be on making it easier for businesses to invest for the future. There are positive signs, but much more needs to be done to create the right conditions for long-term growth.