Welsh businesses feel under pressure to raise their prices due to labour costs, according to Chambers Wales South East, South West and Mid’s first Quarterly Economic Survey of the year.

Some 85 per cent of businesses in Wales stated that labour costs, including salaries, pay settlements and contractors, were a key business pressure in the first quarter of the year, with the concern rising from 81 per cent in Q4 of 2024.

Increases to the National Minimum Wage (NMW) and Employer National Insurance Contributions (NICs) from 1 April and 6 April respectively are also factoring into businesses’ plans to raise prices of their goods or services by up to 15 per cent to cover costs with 44 per cent of Welsh businesses surveyed saying that they plan to raise prices because of both NMW and NICs, and 10 per cent suggesting that they will increase prices because of the National Insurance increase only.

More than three quarters of businesses in Wales (76 per cent ) revealed that the size of their workforce remained constant in the last three months, with the number attempting to recruit in Q1 falling to 40 per cent , compared to 45 per cent in the previous quarter. More than half of Welsh businesses (58 per cent ) expect the size of their workforce to remain constant in the next quarter, while 23 per cent plan to increase their workforce.

The Quarterly Economic Survey for Q1 also showcased the successes and confidence of businesses as they began the new calendar year, with 39 per cent experiencing an increase in export sales and bookings, 28 per cent increasing investment plans for plant, machinery, technology and equipment, and 45 per cent predicting that turnover will improve.

Gus Williams, interim CEO at Chambers Wales South East, South West and Mid, said: “In our recent Quarterly Economic Surveys, including this survey for Q1, recurring concerns for businesses centre around labour costs and taxation. As changes are set to come into effect in April, businesses in Wales are having to review their goods and services prices, ongoing costs and recruitment plans.

“While there have been glimmers of optimism in exporting and some aspects of investment this quarter, firms will require reassurance and action from government to avoid stagnating and unlock growth. The Office of Budget Responsibility’s revised growth forecasts suggest that economic growth is less certain this year but will be a longer-term achievement.”