Business confidence in Wales rises but far lower than the UK as a whole

Overal business confidence in Wales rose in February but remains well below the level for the UK as a whole, according to the latest business barometer from Lloyds.

While companies in Wales reported lower confidence in their own business prospects month-on-month, down three points at 31%, their optimism in the economy rose ten points to 18%. Taken together, this gives a headline confidence reading of 24% ( 21% in January). For the UK as a whole overall business confidence rose 12 points to 49% - its highest level since August 2024.

In Wales a net balance of 20% of businesses also expect to increase staff levels over the next year, up 15 points on last month.

Looking ahead to the next six months, Welsh businesses identified their top target areas for growth as evolving their offering, for example by launching new products or services (42%), investing in their team, for example through training and development (36%), and introducing new technology such as automation or AI (34%).

The north east of England was the most confident UK nation or region in February (69%), followed by the north west and east of England, both at 61%.

All four sectors surveyed saw double-digit increases in confidence. The largest improvements were seen in manufacturing, which rose by 13 points to 51%, and construction, which increased by 14 points to 50%. Retail also experienced a significant gain, up 11 points to 51%, and services rose by 10 points to 48%.

Within the services sector, hospitality firms posted a particularly strong rebound in sentiment. Confidence across these sectors reached their highest levels in several months, ranging from four months in services to seven months in manufacturing.

Dave Atkinson,director for Wales at Lloyds said: “It’s encouraging to see Welsh business confidence return to growth, and to see more firms planning to hire – a move that doesn’t just benefit their operations, but their local communities too. “We’ll continue to support Welsh companies as they press ahead with their growth strategies to help them make the most of any opportunities that lie ahead.”

Hann-Ju Ho, senior economist, Lloyds Commercial Banking, said: “The rise in business confidence demonstrates the resilience of UK businesses and their ability to navigate challenges, such as rising costs and uncertainty. Increased optimism, along with an expected uplift in trading prospects, is prompting businesses to invest in growing and upskilling their workforce, putting them in a prime position to capitalise on increased demand and drive future growth.