Welsh business confidence fell to the lowest level in the UK in February as companies across the nation became more pessimistic about their own prospects, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
Overall confidence dropped 11 points in February, to give the lowest reading since the regional Barometer was launched in January last year.
This is partly due to companies’ confidence about their own future business activity falling to 11 per cent, down from 22 per cent in January.
When combined with their views on the economy, this gave an overall confidence figure on minus two per cent.
Welsh firms’ falling confidence could also be seen in their hiring plans, with a net balance of one per cent of firms planning to reduce staff numbers over the next 12 months.
Meanwhile, a net balance of 11 per cent of Welsh companies said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity. A net balance of six per cent thought it was having a positive impact a month ago.
Across the UK, firms’ confidence in their own trading prospects fell 14 points to 13 per cent while economic confidence fell by 15 points to minus five per cent.
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: “This data indicates slowing growth in key international markets, together with ongoing uncertainty at home, is weighing on Welsh businesses and leading some firms to review their investment plans.
“Whatever the next 12 months may hold, we’ll be by the side of Welsh businesses and have pledged to lend up to £1.1 billion to help them achieve their ambitions in the coming year.”
Regional picture
After Wales, businesses in Yorkshire and Humber and the South East were the least confident regions, each registering an overall confidence figure of zero per cent.
Businesses in the North West showed the most confidence, at 12 per cent, ahead of the West Midlands (11 per cent) and the North East (seven per cent).
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking commented: “Political uncertainty has clearly affected business confidence across the UK, but the underlying economy remains resilient and is able to absorb short-term volatility.
“The modest rise in optimism at the start of the year was no more than a blip as uncertainty continues to impact on business confidence. The results suggest that near-term economic growth prospects have moderated further, but there is potential for a recovery further out should uncertainties subside.”
