Federation of Small Businesses (FSB) Wales has written to Welsh Government Cabinet Secretary for Finance, Mark Drakeford MS, warning that the Welsh Government Budget 2026/27 will deliver a severe blow to the hospitality and leisure sector that is already struggling to thrive.

FSB’s Small Business Index figures show confidence at a dismal minus -58 points. For the first time the number of small firms expecting to downsize, close or sell in the next 12-moths (30%) now exceeds those planning to grow (18%).

The domestic economy is the top concern for 68% of businesses, followed by tax burdens that stands a 45%.

While FSB Wales welcomes the new retail multiplier that will ease pressure on shops, the decision to exclude hospitality and leisure is very concerning. FSB Wales’ analysis shows a typical small retailer will face an 18% rise in business rates, yet a hospitality or leisure business with the same rateable value will see a 40% increase by the end of the transitional period. For medium sized properties in these sectors, their bills could jump by as much as 70% once the transitional relief ends.

The recent announcement of a 15% relief for pubs, music venues and restaurants alongside transitional relief will slow the increase in bills for this next budget year. However, by the end of the three-year transition period many businesses will revert to a significant rise in bills.

In addition, 6,500 properties will be placed into business rates for the first time because the Small Business Rate Relief threshold remains frozen.

Joshua Miles, Head of FSB Wales, said: "Hospitality and leisure businesses are the lifeblood of our towns and city centres right across Wales, yet they are being hit with far steeper rates increases than retail. Many are already operating on wafer thin margins and these rises risk closures, job losses and empty properties in town and city centres across Wales. We call on the Welsh Government to include hospitality and leisure in the new retail multiplier to support these vital sectors and to raise the Small Business Rate Relief threshold to £12,000, to match England.”

FSB Wales is asking the Cabinet Secretary to act quickly to prevent further damage to the Welsh economy and protect the businesses that bring life to high streets across Wales and the many community benefits they create.