Welsh businesses are entering the final months of 2026 with renewed confidence, with growing numbers planning to recruit staff, invest in new technology and expand into new markets.
The latest Business Barometer from Lloyds reveals that business confidence in Wales jumped 38 points during October to 54%, reaching its joint-highest level of the year and placing Welsh business sentiment above the UK average of 47%.
The sharp increase follows September’s reading of just 16% and takes confidence well above the Welsh 12-month average of 37%.
The improvement is being driven by a more positive outlook for both individual businesses and the wider economy. Confidence in companies’ own trading prospects rose 36 points to 58%, while optimism about the economy increased 42 points to 51%.
Stronger customer and market demand was the most frequently cited reason for improving economic optimism, identified by 58% of Welsh firms. Improving interest rates and financial conditions were highlighted by 38%, while 36% pointed to positive developments within their industries.
The renewed optimism is also translating into plans for business growth and recruitment.
A net balance of 42% of businesses in Wales expect to increase staffing levels over the next 12 months, an improvement of 12 points compared with September.
Investment in technology is emerging as a leading priority, with 43% of Welsh businesses identifying the introduction of new technologies, including artificial intelligence and automation, as a key area for growth over the next six months.
Developing workforce capabilities is another important focus, with 37% planning to prioritise investment in their teams through measures such as training. Meanwhile, 34% are targeting expansion into new markets.
Together, the findings suggest that Welsh businesses are looking beyond immediate trading conditions and considering how investment in technology, people and new commercial opportunities could support longer-term growth.
Nathan Morgan, Area Director for Wales at Lloyds, said:
“It’s fantastic to see such a strong rebound in confidence among Welsh businesses this month, with economic optimism now outpacing the UK average. Stronger customer demand is clearly helping to lift sentiment, while the rise in hiring intentions suggests firms are confident about their outlook for growth.
“What’s particularly encouraging is that businesses are looking to build on this momentum, with investment in new technology, exploring new markets and developing their people. This forward-thinking approach will be key to boosting productivity, strengthening competitiveness and unlocking new opportunities for businesses across Wales in the last few months of the year.”
The improvement in Wales comes alongside a wider recovery in business confidence across the UK, although the increase nationally was more modest.
UK business confidence rose six points to 47% in October, compared with 41% in September, and remains above its long-term average of 30%.
Optimism about the wider UK economy increased nine points to 40%, supported by stronger customer demand, more positive economic news and improving financial conditions.
Businesses also reported an improvement in their own trading prospects, with confidence rising five points to 55%.
Nearly two-thirds of UK firms (63%) expect business activity to increase over the next year, six points higher than in September. The proportion anticipating a decline in activity edged up one point to 8%.
Among those expecting stronger trading, increased customer demand, investment in technology and improvements in supply chain conditions were identified as important drivers.
The national findings indicate that businesses are continuing to identify opportunities for growth despite ongoing cost pressures and uncertainty linked to the conflict in the Middle East.
Fiamma Morton, Managing Director, SME Banking at Lloyds, said:
“I hear from business owners every day about their determination to keep moving forward. There are still challenges, but increasingly the conversation is about what comes next: where new customers will come from, how technology can make the business better, and where investing today might create an opportunity tomorrow.
“There are careful choices to make. Cost pressures haven’t gone away, so investment needs to work hard. But the ambition is absolutely there. Businesses are continuing to find ways to grow, adapt and make their next move.”
The Lloyds Business Barometer surveys 1,200 businesses every month and has been tracking business sentiment since 2002, providing an early indication of economic trends across the UK and its regions.
