Employment in Wales will not return to 2019 levels until 2024, a new report from chartered accountancy body ICAEW has suggested.

The Economic Outlook, commissioned from Oxford Economics, found that a reliance on manufacturing had hit Wales particularly hard.

Businesses in Wales have been heavily disrupted by the coronavirus pandemic. As a result, Oxford Economics predicted that employment levels in Wales would not return to its 2019 level until the year 2024.

In addition, employment levels in sectors such as financial and insurance, education, and manufacturing, would be lower in 2021 than they are this year.

Welsh businesses will be vulnerable to the result of trade talks between the UK and EU because most of their exported goods go to the EU¹. Wales has the highest percentage of exports to the EU of any nation or region within the UK. A negative outcome to talks, which causes trade difficulties, would leave many businesses unable to export their goods or having to find new markets in a time consuming and costly process.

The report also shows the Welsh population shrinking over the next five years, which could lead to a drop in skilled talent.

The Oxford Economics report found that sectors that had to shut during lockdown – such as restaurants and airlines – were badly hit by the pandemic. Manufacturers dependent on global supply chains, or where demand fell sharply, were also affected.

ICAEW said the report showed that an industrial strategy that focused on jobs for the future was essential to recovery.

Martin Warren, ICAEW Regional Director for Wales, said: “Businesses in Wales have faced very difficult conditions over the last few months, and unfortunately this looks set to continue. Employment in particular is a concern, and this report shows we may not return to pre-pandemic levels until 2024.

“The Chancellor’s autumn budget should be a social, education and industrial strategy which combines protection and re-training for displaced workers over the short and medium term, with intervention and investment to create jobs with a future, especially in the green and scientific sectors.

“Wales has been dependent upon the furlough scheme to minimise job losses and immediate prospects may therefore depend upon continued UK government support for sectors where economic activity is not going to return in the short term. These would complement the measures already being planned by the Welsh Government.”

Richard Holt of Oxford Economics said: “The resolution of trade negotiations with the EU will be particularly important for Wales, with its important manufacturing sector and particularly high reliance on exports to the EU. This is a challenge which may test business confidence, just when we really need it to revive.”