Santander UK Chief Economist delivers The Forum's annual lecture
A LEADING UK economist says Welsh businesses are reporting relatively high levels of optimism, but warned that there is a risk that the recent stagnation of economic conditions in the EU might stifle growth.
Barry Naisbitt, Chief Economist at Santander UK, says recent data puts Welsh business confidence at 42 per cent, above the UK average of 30.
And he added that Cardiff's emergence as the fourth most competitive UK city outside London, behind Edinburgh, Bristol and Manchester, reflected a stronger Welsh economic performance.
"The growth of employment in the UK is broadly based, and the scale of the fall in the unemployment rate over the past year is unprecedented. This in turn has led to improved consumer confidence, the highest level for seven years, and also a big increase in the number of job vacancies.
"And we are seeing for the first time in several years, with inflation falling to 1.3 per cent, average earnings growth looking like actually over-taking inflation."
But, speaking at the annual lecture of The Forum at Cardiff Metropolitan University, Mr Naisbitt warned that the raft of positive UK economic data could not disguise the impact of sluggish growth in the Europe Union.
"The EU is still the UK's biggest trading partner, and it is currently almost stagnating – creating the risk that it might become a dragging anchor for exports from the UK economy.
"The two biggest power houses, France and Germany, are showing only very small growth in recent quarters, while Italy is at best flat.
"Despite the weak prospects in the eurozone, growth in the UK should remain steady in 2015 – I would predict around 2.6 per cent, just slightly lower than the 3 per cent we are likely to see in 2014.
"Global uncertainties remain, and the IMF has suggested that the global growth prospects for 2015 are looking mediocre. Its forecast numbers might be right – only time will tell – but, given that the growth outlook is close to the pre-recession average, I don't think that the global growth outlook is as mediocre as some might say."