Business confidence in Wales fell sharply in October as businesses across the nation become more pessimistic about the wider economy, according to the latest Business Barometer from Lloyds Bank Commercial Banking.
The latest report found that a net balance of eight per cent of companies across Wales are pessimistic about the economy, down 26 compared to a month ago, when a net balance of 18 per cent said they were optimistic.
Firms also report lower confidence in their own business prospects, down nine points to a net balance of 21 per cent.
Together this gives an overall confidence figure of six per cent, which is 18 points below last month’s figure of 24 per cent and the lowest level recorded this year.
However, the underlying picture – measured by the average over the past three months – shows overall confidence of 17 per cent, down just four points on a month ago.
Companies’ hiring intentions showed a net balance of 10 per cent of Welsh businesses expect to hire more staff during the next year, down 13 points on last month.
Across the nation, a net balance of 16 per cent said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity. This compares with a balance of 15 per cent that felt it was having a positive impact just a month ago.
Furthermore, a net balance of 26 per cent said they would be confident about their business prospects if a deal on Brexit was agreed in November.
Across the UK, overall confidence fell 10 points to 19 per cent, its sharpest fall and its lowest level all year, as firms’ optimism about the economy slumped 18 points to just eight per cent. Companies’ confidence in their own business prospects fell three points to 29 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, said:
“Ongoing political and economic uncertainty is obviously having an impact on businesses, with ambiguity over what the future might hold potentially causing concern for many.
“But despite this, Welsh companies’ confidence in their own prospects has fallen less sharply than their optimism about the economy as a whole, suggesting a degree of resilience that will be valuable as firms await more clarity in the weeks and months ahead.”
Businesses in London showed the most confidence, at 37 per cent, ahead of the North West (36 per cent) and the West Midlands (23 per cent).
Those in the South West were the least confident, with an overall confidence of just two per cent, 17 points below the national average.
Overall confidence fell significantly in construction (22 per cent, down 19 points) and manufacturing (21 per cent, down 10 points). It also declined in consumer services (29 per cent, down 4 points) and other services (15 per cent, down nine points).
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said:
“Business confidence is continuing to fall as firms become less optimistic about the wider economy, and is impacted by the mixed rhetoric on the progress being made in the ongoing EU-UK negotiations.”