Wales’ tradeable services sector: a mixed-methods study (executive summary)

Miller Research was commissioned by the Welsh Government to independently assess the scale, structure, and strategic significance of Wales’ tradeable services sector. The objective was to understand the contribution of services to the Welsh economy, assess their export potential, and identify actionable policy options to support sustainable growth. The focus of the research was on services that can be sold or consumed outside Wales, including embedded services not always recognised by conventional trade metrics. The study aims to fill data gaps, uncover sectoral strengths, and propose a framework for more service-inclusive policy design, in line with the Economic Mission and the Well-being of Future Generations Act.

The study adopted a mixed-methods approach to map and analyse Wales’ tradeable services sector. A comprehensive desk-based review and sector mapping exercise was undertaken, drawing on academic and policy literature alongside official (ONS, Companies House) and proprietary (Beauhurst and TiVA) datasets. Standard Industrial Classification (SIC) codes were used to identify potentially tradeable service sub-sectors in collaboration with Welsh Government. Publicly available datasets were reviewed and analysed to provide a detailed assessment of Wales’ service sector overall, its tradeable service segment, key sub-sectors of interest to this study, and Mode 5 activities embedded within manufacturing exports. Input-Output and Supply and Use tables supported estimation. 

To complement secondary findings, a range of primary research techniques were employed.

• Scoping interviews: 8 semi-structured interviews with industry bodies, sector representatives, and policymakers provided an overview of the service sector and service sector support in Wales. 
• Stakeholder interviews: a further 10 semi-structured interviews with industry bodies, businesses support agencies, businesses, and ecosystem providers added qualitative depth, uncovering real-world challenges related to funding, skills, and support. 
• Online survey: a detailed questionnaire was distributed to a range of service-sector businesses to capture data on export activities, workforce dynamics, and perceived barriers, receiving a total of 55 responses. 

Quantitative data was cleaned, consolidated, and subject to descriptive analysis to profile employment and business counts. Further analysis was undertaken on GVA contributions, productivity, and export patterns using publicly available data. GIS mapping visualised spatial clusters and gaps in our compiled database of potentially tradeable service businesses. A horizon-scanning exercise provided further insights into challenges, barriers, strengths and weaknesses in sub-sectors of interest. 

Wales’ services sector accounts for over 70% of total GVA, and a growing share of employment. Key potentially tradeable sub-sectors –  including financial and insurance services, IT and development, creative and digital media, legal and accounting, and management consultancy – demonstrate strong domestic contributions to GVA and employment. These sectors benefit from a digitally skilled workforce, lower operating costs than some other UK regions, and emerging support structures. Wales’ relatively large manufacturing base means that Mode 5 services, such as design, engineering, and digital inputs embedded in goods, accounted for exports worth between £4 billion and £4.8 billion annually between 2011 and 2020. 

However, the sector faces persistent challenges, including difficulties retaining talent, uneven digital infrastructure across Wales, and limited awareness or uptake of service export support mechanisms amongst interviewees and surveyed businesses. Qualitative data suggests that businesses may operate below their export potential due to a lack of tailored support and limited data visibility. Mode 5 trade is difficult to capture in statistics and is often overlooked in trade policy discussions. This highlights the need for better recognition and measurement. In addition, diversification in Wales’ Mode 5 exports remains limited, potentially posing a risk to economic resilience if leading sectors face international competitive pressures or regulatory shifts. This pattern reinforces the strategic importance of supporting innovation and service integration across a broader range of manufacturing industries in Wales.

Stakeholder engagement also highlighted that current trade support can be insufficiently tailored to service-led businesses. Many reported difficulties in accessing meaningful export advice, aftercare, or finance, with SMEs having potential to feel overlooked by perceived focus on large or low-risk projects. Some respondents emphasised that while the strategic intent of Welsh Government schemes is often clear, delivery mechanisms can feel bureaucratic or poorly attuned to commercial timelines. 

Wales’ tradeable service sector plays a strategically important role in the national economy. There may be an opportunity to better align public policy and export support with the changing nature of trade and the growing importance of knowledge-based services. Existing support structures were described by some stakeholders as insufficiently tailored to the needs of service firms, and a more balanced approach that acknowledges the role of embedded and digitally delivered services could help unlock additional value. 

To support this evolution, the study suggests several areas for consideration.

Data and research

• Improve data visibility and measurement: Wales may benefit from exploring ways to improve visibility of embedded and cross-border service flows within existing data sources. This could include reviewing the Trade Survey for Wales to assess whether incremental refinements - such as expanding the goods/services classification list - might provide more granular insights without increasing respondent burden.

Policy development 

• Address structural challenges: support for small service businesses could benefit from being more agile and informed by commercial realities. Practical enhancements to advisory and finance programmes may help reduce friction for businesses looking to grow internationally and undertake digital transformations. 
• Embed Mode 5 in trade and industrial policy: Mode 5 may represent an important aspect of Wales’ international trade profile. Future trade agreements and industrial strategies could consider how to recognise the contribution of embedded services, including through support for joint innovation between service and manufacturing firms. 

Business support and development 

• Rethink the model of export support: future trade and export programmes could be adapted to reflect the needs of service exporters, including those operating through digital channels or via embedded offerings (Mode 5). This could involve tailored advice, improved access to finance, and more visibility for intangible assets like IP and software.
• Support stronger policy-commercial alignment: There may be value in co-design of future support mechanisms with industry partners, ensuring programmes are practically grounded and delivered by individuals with commercial expertise. Further research and policy development could help build on these findings. Areas for future exploration include: 
  • Mapping Wales’ Mode 5 footprint in greater detail, particularly through enhanced service-product supply chain analysis.
  • Deep dives into high-potential sub-sectors identified in this report, including cybersecurity, fintech, and design-led services, to better understand their specific growth enablers and constraints.

The study encourages ongoing engagement and discussion around how Wales defines, measures, and supports its tradeable service economy. In an increasingly dynamic global environment, deeper engagement with these issues will be essential to unlocking growth, improving resilience, and ensuring the service sector remains a vital component of Wales’ economic future. 

Report authors: Dom Oliver, Nick Miller, Hannah Rigley, Megan Byrne, Gabby Hopkins, Max Mucientes, Yasmin Pemberton / Miller Research (UK) Ltd. 

Views expressed in this report are those of the researchers and not necessarily those of the Welsh Government.

For further information please contact:

Economic Advice and Analysis 
Economic Policy
Welsh Government
Cathays Park
Cardiff
CF10 3NQ

Email: economicpolicy@gov.wales

Social research number: 47/2026
Digital ISBN: 978-1-83745-341-2

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