Just over three-fifths (61%) of private business owners in Wales are confident in delivering growth in the second half of 2026, according to KPMG.
At the start of 2026, KPMG’s annual Private Enterprise Barometer surveyed 1,500 privately owned businesses across the UK, including 123 in Wales, spanning sectors such as professional services, financial services, technology, industrial manufacturing and retail, to understand their growth ambitions and priorities for the year ahead.
Six months on, following a challenging period for the UK and global economy amid instability in global energy markets, persistent inflation and trade restrictions, KPMG returned to these same businesses to understand how changing economic conditions have influenced their outlook.
At the beginning of the year, 89% of private businesses in Wales expressed confidence in their growth prospects for the next 12 months. By the mid-year mark, this sentiment has fallen significantly, with confidence levels dropping to 61%, reflecting a change in expectations for growth during the remainder of the year.
Investment priorities
Despite this, technology remains a leading investment priority for Wales-based businesses, with 55% identifying areas such as artificial intelligence (AI), cyber security and broader digital transformation as key focuses. This is 11 percentage points below the UK average but represents a 16 percentage point increase from 39% at the beginning of the year, underlining the region’s commitment to long-term productivity and innovation.
Diversification also remains firmly on the agenda, with 54% of businesses across the region looking to expand their service offerings and broaden their client base. This represents a small decrease from 57% at the start of 2026 and is down nine percentage points against the current national average.
Of businesses considering how to fund their growth plans, appetite for private equity investment is more subdued compared to the beginning of the year, with two-fifths (40%) of respondents identifying private equity as a way to fund their growth ambitions – down five points on the UK average (45%) and seven percentage points below the 47% recorded five months ago. Instead, almost half (49%) of businesses are turning to their own balance sheets to help fund their growth plans, reflecting a growing preference to retain control and rely on internal resources amid ongoing economic uncertainty.
Looking ahead
Amid a dip in confidence, businesses remain alert to the challenges ahead. Almost half (48%) of businesses in Wales identified inflation and ongoing cost pressures as the two biggest short-term risks facing their organisations. At the same time, firms are looking to policymakers to help strengthen long-term resilience. When asked about the Autumn Budget, more than two fifths (43%) of Welsh firms would like to see growth-focused investment and the industrial strategy prioritised by the incoming Chancellor.
Looking further ahead, the wider economic picture remains front of mind, with 61% of respondents pointing to the UK’s economic outlook and productivity growth as the biggest external factor shaping decisions around investment, growth and exit planning.
David Williams, Wales and South West Office Senior Partner at KPMG UK, said: “This dip in Welsh business confidence during the first half of 2026 reflects a combination of persistent cost pressures, global uncertainty and political change closer to home. However, the headline figure doesn’t tell the whole story, and there remain clear signs of ambition among Welsh businesses.
“The Senedd election in May marked a significant change in Wales’s political landscape. A period of transition can naturally lead some businesses to pause while they wait for greater clarity around future priorities. Certainty and consistency, as the new administration’s plans take shape, should help businesses plan and invest with more confidence.
“Encouragingly, appetite for technology investment has increased since the beginning of the year. This reflects both the strength of Wales’s technology ecosystem and the determination of Welsh businesses to use innovation to improve productivity and pursue growth.”
The national outlook
Nationally, private businesses outlined plans to continue to invest in technology and skills as part of efforts to boost growth after KPMG UK’s mid-year Private Enterprise Barometer revealed a dip in growth confidence due to ongoing UK and global uncertainty.
The survey found that 80% of business owners were confident in their firm’s growth prospects, down from 87% when asked earlier this year.
Overall, technology, including AI, remains the main investment priority signalling this is now shifting towards practical implementation of tech like AI to improve productivity, efficiency, and growth.
Looking ahead to the Autumn Budget, private businesses said the areas most in need of attention to help bolster growth are the faster adoption of new technology and boosting digital capability, growth-focused investment and the continued focus on a renewed industrial strategy.
Euan West, Head of KPMG Private Enterprise in the UK and EMA, said:
“2026 has continued to present private businesses with a challenging operating environment, shaped by uncertainty both at home and abroad.
“Against that backdrop, it is encouraging that eight in 10 business leaders remain confident about their growth prospects. While confidence has eased since the end of last year, the overall picture remains one of resilience and determination.
“What stands out most is how private businesses are responding. Rather than pulling back, they are investing in skills, technology and the capabilities that will help them remain competitive and unlock future growth.
“These results highlight a business community that is realistic about the challenges ahead but confident in its ability to overcome them.
“Private enterprise leaders are entrepreneurial, action-oriented and focused on what they can control. They are not waiting for conditions to improve; they are getting on with the job of creating growth.”
