By Kevin Gardiner (Chair, South East Wales Regional Growth Board)
2026 has certainly started off with plenty to say for itself. What does it hold in store for the world economy, and our favourite bit of it here in South East Wales? My advice is to keep an open mind.
For sure, the geopolitical situation feels unusually fragile.
Things which trouble us as citizens, however, do not always affect an impersonal global economy which has been broadly muddling through so far. The UK could have done better, but despite Brexit, it has kept pace with Germany and France, and visible trade with the EU is roughly a third bigger than when we were in it.
Our regional challenge: “stronger, fairer, greener”
In South East Wales we face challenges of our own. Productivity – which is closely linked to living standards – is too low and some of our communities are among the most deprived in the UK (and probably Europe). We need improved and better integrated public transport as well as cleaner, more secure energy.
Our job as the Regional Growth Board for Cardiff Capital Region (CCR) is to advise the elected local authority decision-makers on how best to tackle these challenges.
The aim is to boost all-round economic wellbeing, to deliver not just a bigger, more prosperous regional economy, but one which is inclusive and environmentally sustainable too. CCR is focused on creating a stronger, fairer, greener region.
It’s not easy. There are lots of opinions on how to develop an economy. Some say it’s all about creating demand; others focus on incentives, finance, or (where relevant) interest and exchange rates.
Few of those opinions, however, mention the things we make or the services we provide. Economists love to talk about consumer spending, government borrowing, inflation, unemployment – but not about what we produce or supply.
Perhaps talking about making stuff is too dull. Yet the mix of output – why we produce some things and not others – matters hugely.
In modern times, the most successful large economy has been America’s. It is no coincidence that America has often led the product cycle.
US Inc., often in (overlooked) partnership with the federal government, is an expert at inventing and delivering what people want to buy next. Affordable cars, labour-saving appliances, mass entertainment, low-cost telecoms, computing, digital media, Artificial Intelligence (although perhaps the jury is still out there).
This, not a cheap dollar, low interest rates or a spendthrift government, is why it has done so well. When President Trump proposes to Make America Great Again, by using a lower dollar to reopen closed US mines and steelworks, he seems effectively (and mistakenly) trying to roll back this tide of innovation. We could teach him a thing or two here at least.
Closer to home, and more recently, Ireland offers the nearest I’ve seen to a blueprint for transforming a small economy. In 1994, I labelled its quickly growing economy a “Celtic Tiger”. Living standards there have since risen from the relegation zone to the top of the international table.
Industrial strategy has been part of its success. Low business taxes, EU membership and a flexible, skilled workforce have helped hugely, but in combination with clusters of successful businesses – mostly foreign-owned, and in phase with the global product cycle – including information technology, life sciences and financial services.
What we make and how we make it
Of course, South East Wales can’t pull all the levers Ireland did. We don’t control business taxes and are sadly outside the EU’s single market. We can, though, reinforce our own successful clusters.
Our priority sectors are innovators, creating and using new technologies. In recognition of some of these strengths, the region was awarded £30 million of Local Innovation Partnership Fund (LIPF) by UK Research and Innovation (UKRI) in late 2025.
These priority sectors aim to compete not on price, but on quality and uniqueness. The low wage “race to the bottom” advocated by some UK policy advisers won’t work. China and Vietnam – and after them, India – have that market cornered. We seek a high-wage economy, not a cheap one.
That said, remember our mandate: growth must be inclusive and sustainable. Alongside competitive, high-productivity ventures then we also need to invest in some conventional and foundational employment-creating sectors – such as housing, transport, tourism – and in the energy transition.
In all this we can draw on three commercially aware universities and a flourishing further education sector for skills. We have access to some direct funding of our own with which to back local ventures under the oversight of the CCR investment board chaired by my colleague Frank Holmes.
We can open our arms to inward investment, as Ireland did. We may not be able to offer bargain basement tax rates, but the local quality of life, our culture and relatively affordable housing is an important draw.
Foundations worth building on
For those unfamiliar with our background, our development model has grown out of the 2016 CCR City Deal, a three-way partnership between Westminster, Senedd and the ten local authorities. In reviews, our auditors have endorsed our strategy. Our region is full of opportunities – we need to tell our story.
We hope that whoever wins the Senedd elections in May will build on this progress and perhaps roll-out something similar across other Welsh regions. We have our Investment Zone, which will power the innovation corridor across South East Wales, connecting key clusters with a supply chain and talent pool.
In conclusion, the economic glass is half full. In saying this I am a realist, not an optimist. Despite that Wall of Worry, the average human being has never been better fed, clothed or housed.
Here in South East Wales, despite our challenges, the economy may be twice as big, per capita, as it was when Cardiff’s East Moors works were closing, and I was a DHSS clerical officer in Canton. The region has moved on – different workplaces, different products – and it will again.
Wishing you a peaceful and healthy 2026.
Kevin Gardiner (Chair, South East Wales Regional Growth Board)
