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Welsh Business Confidence Climbs for Third Consecutive Month


Business confidence in Wales rose one point during December to 18%, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in the country reported lower confidence in their own business prospects month-on-month, down five points at 31%.  When taken alongside their optimism in the economy, up nine points to 6%, this gives a headline confidence reading of 18%.

Welsh businesses identified their top target areas for growth in the next six months as evolving their offering (36%), investing in their teams (24%) and investing in sustainability (22%).

The Business Barometer, which surveys 1,200 businesses monthly, provides early signals about UK economic trends both regionally and nationwide.

A net balance of 5% of Welsh businesses expect to reduce staff levels over the next year, down 21 points on last month.

Overall UK business confidence rose seven points during December to 17%. The proportion of businesses that felt positive about the wider economy was up 10 points month-on-month to 8%, while their outlook on their own future trading prospects increased by two points to 27%. Businesses also remained optimistic about job creation, with 16% of firms planning to hire more staff in the next 12 months – up two points on November.

All UK regions and nations reported a positive confidence reading in December, for the first time since July, with eight out of 11 recording a month-on-month increase in confidence. Of those, the North West (up 31 points to 40%), North East (up 24 points to 34%) and South East (up 23 points to 14%) saw the largest monthly increases, with the North West now the most optimistic overall.

Dave Atkinson, regional director for Wales at Lloyds Bank Commercial Banking, said: 

“It’s good to see overall confidence among Welsh businesses stabilise this month, at the end of what has been another turbulent year. Firms will be looking to maintain this cautious optimism as we enter 2023, with hopes that rising inflation will finally plateau, and supply chain disruption and labour shortages will ease too.

“Of course, businesses would be wise to keep a close eye on cash flow over the coming months to help mitigate the impact of some of these challenges. We will be firmly by their side to help them kick off the new year in rude health.”

The manufacturing sector reversed a six-month trend of falling confidence, with a nine-point rise to 13%. Confidence in construction and services also increased by nine points to 29% and 18% respectively. However, retail confidence fell slightly, by two points to 13%.

Hann-Ju Ho, Senior Economist Lloyds Bank Commercial Banking, said:

“Business confidence has received a boost in the run up to Christmas as firms anticipate a better festive trading period than last year. While firms report being hopeful for a more successful 2023, inflation and the risk of an economic downturn remain the biggest concerns for businesses, with rising costs evidenced by the number of firms expecting to raise prices.

“Wage growth is expected to remain high for now as retaining existing staff and attracting new talent will continue to be priorities for many businesses going into next year.”