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Brexit and Coronavirus Lead to Concerns for Welsh Businesses

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Challenges from Brexit and coronavirus have put confidence among Welsh businesses into negative territory, a new report has found.

The ICAEW Business Confidence Monitor for Quarter 4 2020, said Wales’s share of exports to the EU, which was higher than any other part of the UK, meant its businesses were more exposed to Brexit uncertainty.

Welsh businesses had experienced a sharper decline in domestic sales than across the UK as a whole, while exports had also fallen. Both falls were similar to the declines experienced during the global financial crisis.

Meanwhile, Welsh businesses had reduced headcounts by 1.8% year-on-year, the steepest decline across the UK.

Half of Welsh companies said customer demand was a growing challenge, while a quarter of businesses said the ability to expand into new markets was a more pressing concern.

Companies expected sales and profits to increase over the next year, though Wales’s recent firebreak lockdown could lead to a more protracted recovery in company performance.

Melanie Christie, ICAEW Director of Regions, said:

“Businesses in Wales have been struggling with the coronavirus pandemic and Brexit-related uncertainty, so it’s unsurprising that confidence is in negative territory.

“As well as growing challenges from a lack of customer demand and declines in domestic sales and exports, headcounts have declined more in Wales than anywhere else in the UK.

“With less than 50 days to go until the end of the Brexit transition period, we hope the government will make every effort to reach a fair deal for the UK, which will be vital for the UK’s post-pandemic economic recovery.”

Nationally the BCM findings showed that the proportion of companies struggling from a lack of demand had increased from more than a third in Q4 2019 to over half this quarter. Late payments were a rising concern for a third of businesses, indicating financial distress in the market.

Business News Wales