Welsh firms’ downbeat view of future prospects

WELSH businesses were among the least optimistic in the UK in April, despite confidence rising to a positive net balance of 22% according to the latest Business Barometer report from Lloyds Bank Commercial Banking.

Companies reported higher confidence on trading outlook at 24% and economic optimism at 20%.

This gives an overall confidence of 22%, nine points higher than last month’s figure of 13%.

Companies’ hiring intentions showed that a net balance of 14% of businesses in Wales expect to hire more staff during the next year, down nine points on last month. And a net balance of 5% of businesses said they felt the UK’s exit from the EU was having a negative impact on their expectations for business activity, down nine points on a month ago.

Across the UK, overall confidence remained unchanged at 32%, although firms’ confidence in their own business outlook fell five points to 31%.

The Business Barometer questions 1,200 firms monthly and provides early signals about UK economic trends both regionally and nationwide.

Allan Griffiths, regional director for Wales at Lloyds Bank Commercial Banking, said: “Although it’s positive to see that business confidence across Wales has risen, it’s concerning that the nation’s firms are still among the most pessimistic in the UK.

“However, speaking to companies across Wales, many remain resilient in the face of uncertainty and are revisiting their business plans and assessing their working capital to ensure that they can navigate any potential challenges that lie ahead.”

Overall confidence was highest among businesses in north-west England, at 49%, followed by London (43%) and the north-east (34%).

Businesses in the south-west were least confident, with an overall confidence of 20%.

Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said: “The fact that UK businesses’ economic optimism rose this month, against a backdrop of slightly eroding business prospects, is clearly good news.

“With more than half of firms nationwide more upbeat about the economy than they were at the start of the year, it will be interesting to see if that trend continues to grow as we approach the halfway point in 2018.”

On a sector basis, transport shows the strongest overall confidence (at 56%), followed by communications (47%). The third-strongest industry sector was manufacturing (40%), even though it fell by 9%.

The industry sectors with weakest overall confidence were retail, which fell 12% to 15%, and health, education and public sector (all at 20%).