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Dev-Bank Wales MBO


6 March 2024

Welsh Business Confidence Falls in February

Business confidence in Wales fell seven points during February to 25%, according to the latest Business Barometer from Lloyds Bank Commercial Banking. 

Companies in Wales reported lower confidence in their own business prospects month-on-month, down nine points at 28%. When taken alongside their optimism in the economy, down six points to 21%, this gives a headline confidence reading of 25% (vs. 32% in January).

Welsh businesses identified their top target areas for growth in the next six months as investing in teams (35%), introducing new technology (33%), and evolving their offering, including introducing new products and services (25%).

A net balance of 19% of businesses in the region expected to increase staff levels over the next year, down 12 points month-on-month.

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

National picture 

Overall, UK business confidence dipped two points in February to 42%, driven by softening confidence from firms in both their own trading prospects (49% vs. 51% in January) and the wider economy (34% vs. 37% in January).

However, companies’ hiring intentions increased to the highest level since May 2022, with 36% of firms intending to increase staff levels over the next 12 months, up three points on the month before.

Scotland was the most confident part of the UK in February (56% vs. 42% in January), followed by the North East (54% vs. 62%) and the East Midlands (52% vs. 38%).

Sector Insights 

There was a mixed picture for sectors this month. Confidence fell in manufacturing (nine points to 40%) and construction (seven points to 38%) respectively, although results remain higher than the same time last year. In contrast, the dominant services sector was unchanged compared to January at 45%, exceeding all months of 2023 except for November. Retail confidence was broadly steady, dipping one point to 41%.

Sam Noble, regional director for Wales at Lloyds Bank Commercial Banking, said:

“February’s dip in confidence reflects a wider trend seen across the UK as businesses navigate what are improving, but still challenging, economic conditions.

“However, it’s encouraging to see Welsh businesses pressing ahead with their strategies for future growth as bright spots and opportunities continue to emerge. This month alone has seen Welsh food and drink producers showcasing the country’s world-class produce at trade shows in Asia and the Middle East, and seen Cardiff University selected to help spearhead new UK-wide developments in artificial intelligence.

“This is a country with huge adaptability, resilience and skill. Whatever business’ ambitions, we’ll continue to be by their side to help them achieve their plans.”

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

“This month’s data still reflects a positive mood among businesses despite a marginal fall in overall confidence. Firms appear to be upbeat about their prospects and the economy, supporting their positive staffing expectations.

“Looking at the sectors, there is a mixed picture. There was a slight fall in confidence reported in the manufacturing and construction sectors, while retail and services stood their ground – remaining unchanged compared to January’s figures. But despite the manufacturing and construction fall, businesses are still showing high levels of confidence.

“The split across the regions also provides reason to view the dip in confidence at the broader UK level cautiously. Six regions have reported an increase in confidence while the other six have reported a decrease. So, scratching the surface, we see a story that continues to show a more positive outlook for the year ahead.”


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