Business confidence in Wales improved in Q1 2026 but has remained in negative territory as the Iran War dampened optimism, a survey of chartered accountants published today has found.
ICAEW’s Business Confidence Monitor (BCM) for Q1 2026 put sentiment at -3.7 on the index, an increase on the previous reading of -7.8 but below the national average.
Although confidence increased during the survey period, it declined in the final weeks of the survey following the conflict in the Middle East. The Iran war has led to higher fuel prices and a rise in global uncertainty, presenting a significant risk to the outlook for Welsh businesses, ICAEW said.
Annual domestic sales growth in Wales increased to 3.6% in the quarter, likely linked to the uplift among businesses in the manufacturing and engineering sector, a key source of the country’s economic output. Businesses were optimistic that sales growth would strengthen further in the next 12 months.
The rise in sentiment before the Middle East conflict could be linked to boosted investment in Wales, particularly the focus on moving Port Talbot away from a reliance on the Tata steelworks and designating it a port specifically developed for offshore wind, ICAEW said.
When asked about growing challenges, three in five respondents cited regulatory requirements as a growing challenge, likely a reflection of new requirements in the Employment Rights Act to which Welsh businesses are particularly exposed. Tax pressures and labour costs were also cited as prominent rising challenges.
Robert Lloyd Griffiths, ICAEW Director for Wales, said:
“Though the Iran war has dented confidence among Welsh business, it’s pleasing to see that sentiment had improved among our companies.
“Nevertheless, our members tell us that doing business is too difficult, too expensive and too uncertain. That’s why with the Senedd elections less than a month away, we are calling on the next Welsh Government to appoint a Commissioner for Productivity who can keep delivery on track, champion reform and make sure Wales turns ambition into measurable improvements for businesses and communities.”
