Small firms call for urgent action in Welsh Draft Budget 2026–27
The Federation of Small Businesses (FSB) Wales has urged the Welsh Government to make small and medium-sized enterprises (SMEs) a top priority in its 2026–27 Draft Budget, warning that many firms are struggling with rising costs, low confidence, and reduced support.
In evidence submitted to the Senedd Finance Committee, FSB Wales said bold, targeted action was needed to provide “immediate relief and long-term stability” for small businesses, ahead of next year’s Senedd election and the introduction of a larger legislature.
The organisation’s submission highlights an “alarming fall” in confidence across the small business sector. According to the UK Small Business Index (Q2 2025), 27% of small firms expect to shrink or close in the next 12 months, and the confidence level has plunged to -44 points — the first time in the index’s history that more firms expect to contract than grow.
FSB Wales said the figures reflect pressure from rising National Insurance contributions, increasing wage and energy costs, and lingering pandemic debts.
The organisation is calling for a comprehensive package of measures to help Welsh businesses survive and recover, including:
Business Rates Reform: Extend lower rates for Retail, Leisure and Hospitality sectors to support high street regeneration, while ensuring eligible firms are not worse off under new discretionary reliefs.
Skills and Apprenticeships: Restore apprenticeship funding to pre-2023/24 levels to reverse a drop of 6,000 apprenticeship starts last year, costing the Welsh economy £50.3 million.
Business Support and Investment: Reinstate support funding to pre-EU exit levels in real terms, commit to multi-year budgets, and introduce a voucher scheme to help SMEs access private sector expertise.
Planning and Local Authority Capacity: Continue funding for planning authority skills and introduce incentives for faster decision-making to reduce delays that hold back small business projects.
Transport: Improve public transport, particularly in rural areas, where 30% of SMEs cite poor connectivity as a barrier to hiring.
In the longer term, FSB Wales says the budget should align with the Well-being of Future Generations framework and deliver:
-A reformed Fiscal Framework giving the Welsh Government greater flexibility in financial planning and borrowing.
-Clarity on how the Shared Prosperity Fund will be replaced to ensure consistent regional investment.
-Stronger collaboration with the Development Bank of Wales and Wales Pension Partnership to improve access to finance for SMEs.
John Hurst, Chair of FSB Wales, said small businesses across the country are under immense pressure.
“With Wales’s employment rate falling and a low economic activity rate, compounded by the UK Government’s National Insurance increase for employers, impacting 940,000 across the UK, small businesses are under immense pressure,” he said.
“FSB Wales urges Welsh Government to leverage its powers to mitigate these challenges and align with the UK’s Industrial Strategy and Small Business Plan to restore confidence and drive growth for SMEs across Wales.
“With a late UK Autumn Statement pending, FSB Wales calls for cross-party collaboration to pass a budget that supports our SMEs. This budget is a pivotal opportunity to provide SMEs across Wales with the clarity, confidence and support needed to plan, invest, and grow. We urge Welsh Government and all Members of the Senedd to work to deliver a budget that fosters resilience, supports local communities, and sets a strong foundation for any incoming Welsh Government next year.”
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