Falling optimism for the economy overall has pushed business confidence in Wales to among the lowest levels in the UK in June, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
The latest research finds that economic optimism has fallen to 11 per cent since May, 20 points below last month’s figure of 31 per cent. However, this hasn’t affected firms’ optimism in their own business prospects, which remain steady at 28 per cent.
Together this gives an overall confidence figure of 20 per cent, which is 10 points below last month’s reading of 30 per cent.
Falling confidence also impacted companies’ hiring intentions, with a net balance of 10 per cent of businesses in the country expecting to hire more staff, down 24 points on last month.
Across Wales, a net balance of 18 per cent of businesses said they feel that the UK’s exit from the European Union is having a negative impact on their expectations for business activity. This is in contrast to a net balance of five per cent thinking it was having a positive impact just a month ago.
Meanwhile, a net balance of 24 per cent of Welsh companies expect the Bank of England to increase interest rates this year, with the average* firm indicating that raising rates to 1.5 per cent would have a significant negative impact on their business.
Across the UK, overall confidence fell six points to 29 per cent, as firms’ optimism about the economy dipped, weighing down their confidence in their own business prospects.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
David Beaumont, regional director for Lloyds Bank Commercial Banking in Wales, said:
“Continued uncertainty is weighing on firms’ optimism about the economy in Wales, but their confidence in their own prospects for the year ahead remains unaffected.
“This shows their resilience to wider events, and their ability to deal with uncertainty as the new normal.
“But the fact that firms are adjusting their hiring plans also suggests they are taking steps to ensure they can respond to any potential challenges that may lie ahead – including a possible rise in interest rates during the summer.”
