Business confidence in Wales fell 20 points during January to 32%, according to the latest Business Barometer from Lloyds.
Companies in Wales reported lower confidence in their own business prospects month-on-month, down 30 points at 38%. When taken alongside their optimism in the economy, down eight points to 27%, this gives a headline confidence reading of 32% (vs. 52% in December 2025).
Meanwhile, a net balance of 44% of businesses in the region also expect to increase staff levels over the next year, up 24 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 introducing new products or services (43%), investing in their team, for example by investing in training (40%) and introducing new technology (33%).
The Business Barometer, which surveys 1,200 businesses monthly and which has been running since 2002, provides early signals about UK economic trends both regionally and nationwide.
National picture
Overall, UK business confidence fell three points in January to 44%.
While firms’ confidence in their own trading prospects rose seven points to 59%, their optimism in the wider economy fell 14 points to 28%.
London was the most confident UK nation or region in January (68%), followed by Northern Ireland (66%) and the West Midlands (65%).
Sector Insights
Retail sentiment increased marginally in January, up two points to 49%, while confidence in the service sector rose slightly, up one point to 42%, the first increase since the summer. Confidence fell in the construction sector following a particularly strong increase in December.
Nathan Morgan, Area Director for Wales at Lloyds, said: “Business confidence has reduced this month, reflecting wider economic headwinds. However, there are encouraging signals for Welsh firms.
“Hiring intentions are up 24 points this month, with businesses planning to invest in people at scale, showing real commitment to growth despite wider economic challenges. We’ll continue to provide support to help businesses, making the investments that will position them well for the months ahead.”
Hann-Ju Ho, Senior Economist, Lloyds Commercial Banking, said: “Firms are reporting confidence in their trading prospects at the start of the year, despite a slight softening of wider economic optimism. This points to businesses’ ability to manage external risks and a focus on growth opportunities.
“The first rise in confidence in the services sector in seven months is encouraging given the sector’s central role in supporting UK economic activity.”
