Business confidence in Wales fell 38 points during September to 16%, according to the latest Business Barometer from Lloyds.
Companies in Wales also reported lower confidence in their own trading outlook month-on-month, down 43 points at 22%. When taken alongside their optimism in the economy, down 34 points to 9%, this gives a headline confidence reading of 16% (vs. 54% in August 2026).
Despite this, firms in Wales reported stronger customer and market demand (51%) and improving inflation or cost pressures (36%) as the leading drivers for optimism in the economy.
For those expecting business activity to increase in the next year, 76% cited stronger customer demand as a catalyst, while 43% pointed towards increased investment in capacity or technology.
Business confidence in Wales now sits below the 12-month average of 36%, with its highest figure this year of 57% in August.
Looking ahead to the next six months, Welsh businesses identified their top target areas for growth as investing in their team, for example with training (46%), entering new markets (38%) and evolving their offering, for instance with new products or services (36%).
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.
Nathan Morgan, Area Director for Wales at Lloyds, said: “While confidence has dipped this month, it’s positive to see businesses in Wales continuing to invest in the things that will support their long-term growth.
“Upskilling is clearly front of mind, with almost half of firms looking to invest in training over the next six months.
“Alongside plans to enter new markets and develop new products and services, that suggests businesses are continuing to look ahead and adapt despite a more challenging backdrop.
“Strong customer demand also remains an important source of optimism, and firms that continue to invest in their people and capabilities will be well placed to make the most of new opportunities as they emerge.”
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Overall, UK business confidence fell 12 points to 41% in September, the lowest level since April 2025.
This decline follows August’s reading of 53%, the second highest recorded this year, and buoyant results since May. While confidence remained well above the survey’s long term average of 30%, it was six points below the 12-month average of 47%.
The overall 12-point decline, which was comparable to the fall recorded earlier this year following the start of the Middle East conflict, was driven by a fall in economic optimism, as businesses responded to higher energy prices as a result of renewed tensions in the Middle East.
Businesses’ own trading outlook declined eight points to 50%, compared to a 12-month average of 56%. The majority of businesses (57% down nine points from August) expect an increase in output over the year ahead, while those expecting a decrease in activity reduced by one point to 7%. Among firms expecting weaker activity, the main drivers were economic uncertainty, higher cost pressures and weaker customer demand.
Amanda Murphy, CEO for Lloyds Business and Commercial Banking, said: “While confidence among larger firms remains strong, smaller businesses have seen a fall in sentiment as they continue to navigate higher costs, inflationary pressures and global uncertainty. Overall confidence remains above its long-term average, and most businesses still expect activity to grow over the coming year, underlining the resilience of UK firms. Ensuring smaller firms can share in future growth will be crucial in the months ahead.”
