The economy of Cardiff is a story of both resilience and growth.
The macro-economic climate of the UK has been challenging, with inflation, cost-of-living pressures, and recurring threats of recession. These macroeconomic factors have profoundly shaped the investment climate, affecting the pace and nature of investments flowing into cities like Cardiff.
Despite these national challenges, Cardiff’s economy has continued to perform well. Sectors like hospitality, leisure, and retail have undoubtedly faced challenging conditions impacted by a combination of the cost-of-living crisis, online retail and declining consumer confidence as the economy has hovered close to recession. Despite these factors investment interest in the city remains high, with the city centre maintaining relatively healthy footfall reflecting its regional role.
Today, Cardiff’s economy is now more diversified and is able to adapt when faced with challenging economic conditions. The city is the leading investment location for Wales and a key driver of the economy of Wales. It has a burgeoning financial and professional services sector which has helped the city to diversify into fintech and complementary technology sectors, notably in cybersecurity, artificial intelligence, digital and creative, while the city’s manufacturing sector ranges from compound semiconductors through to specialist steel, food and med tech.
These new economy sectors are now well represented, and the city is now setting the pace in generating new business start-ups amongst our core city competitors. No longer is Cardiff dependent on just attracting inward investment. Growth in the new economy is coming from local businesses and entrepreneurs who are now finding the wider infrastructure and support mechanisms in place are helping to create better conditions for establishing businesses in the city. For example, the private sector is now the leading provider of incubation and start up space in the city. Fifteen years ago, the council was the only provider in the market. The appetite to create incubation space amongst private sector investors has come from market demand and suppliers such as Tramshed Tech are leading the way.
Whilst macro challenges are still impacting many businesses, investment interest and creation of new businesses in Cardiff has remained positive. In today’s market with the hangovers from the pandemic and challenges associated with return to work, the city stands out in terms of its growing population and skills base. Cardiff over the last 20 years has seen a growth in its population and a track record in creating new jobs. This has been underpinned by its skilled and young workforce with nearly two-fifths of the city’s labour force possessing a degree or equivalent qualification, highlighting the rich talent pool available in Cardiff – a key attraction for all business. This skilled workforce is instrumental as we navigate through periods of economic transitions, particularly in our city centre, which is the largest employment zone in Wales and an economic driver of Wales.
Recent investment decisions in the city by occupiers PWC and Legal & General have also boosted the financial services and professional services sector; Future plc have boosted the digital and creative sector along with Great Point Media; Rocket Science from USA has further strengthened our games sector. The recent investment decision by Rolls Royce Submarines at St Mellons has offered the exciting prospect of establishing at the proposed Parkway site a cluster of technology businesses based around the long-term needs of Rolls Royce and their partners.
As we look forward to the macro-economic conditions easing and the return of stronger growth in the economy there is no doubt that the repurposing of space within the city will continue which will open avenues for more nuanced investments, particularly in competitive leisure spaces which are beginning to flourish and helping to reinforce and broaden the role of the city centre.
The Welsh capital has a bright future. Let us not forget that Cardiff’s demographic profile also enhances its economic prospects. Nearly 30% of our population is between the ages of 15 and 29. This youthful energy is not only a dynamic force but also a magnet for businesses and investors looking for a vibrant consumer base and a talented, innovative workforce. Economic forecasters suggest that Cardiff’s population is set to grow by 20% over the next two decades, presenting great opportunities for our businesses, entrepreneurs, investors and importantly our communities. The Metro and Cardiff Crossrail are set to extend and deepen the reach of the labour market, while the regeneration proposals for Cardiff Bay will raise visitor numbers and investment.
The trajectory of Cardiff’s economy is one of growth and opportunity. As we continue to adapt and evolve, the city is poised not just to weather the economic challenges but to emerge stronger, driven by innovation, a skilled workforce, and a growing, dynamic population.
Whilst significant challenges are in place if we can harness new investment and growth opportunities Cardiff will undoubtedly continue to play a pivotal role in shaping the economic fortunes of Wales and set standards for other UK cities.
