The confidence and resilience of Welsh businesses that held up well during the roller-coaster journey through 2021 is facing another dip over the impact of Covid this winter.
Grant Thornton UK LLP’s Business Outlook Tracker* surveyed c.600 mid-market businesses every other month during a year that began in full lockdown and was followed by a gradual exit from restrictions up to ‘Freedom Day’ in July.
Optimism in Wales about the country’s economic prospects averaged 74% over the year, just above the national average of 72%. One of the biggest dents in confidence was recorded in the final survey, conducted in late November and early December, with some 12% of businesses in the region describing themselves as ‘pessimistic’ about the future of the UK economy.
The views were gathered during the initial outbreak of the Omicron variant, just prior to the announcement of the Government’s Plan B measures. Pessimism about the ability to grow revenues was already creeping back into the Q4 figures, with 40% in the December survey unwilling to express optimism
Across the UK, confidence around revenue growth within businesses peaked in the summer, with 83% expressing optimism, the figure plunging minus -17 percentage points to 66% by December. Wales ended the year below the national average for the same metric at 60%, which followed a trend of declining optimism throughout the autumn following an annual high of 90% of businesses expressing optimism in July and August.
Rhian Owen, a partner based at Grant Thornton’s Cardiff office, said: “I’m sure that many businesses in Wales had hoped that the upheavals of the past 21 months were starting to smooth out, but instead they are now facing a renewed round of restrictions, uncertainty and change. Not only is Plan B now in place, the uncertainty of potential further restrictions, soaring levels of inflation, rising interest rates, supply chain shortages, labour concerns and rising costs are all combining to complicate the business landscape.
“Despite these challenges, we can take confidence in the fact that Welsh business leaders have proven themselves to be exceptionally innovative and resilient since the first lockdown began and now have plenty of invaluable experience that will help them overcome the next hurdles they face. The government also has a vital role to play to ensure that businesses can continue to both hope and plan for growth – particularly in supporting hard hit sectors such as hospitality and in continuing to supercharge the vaccination programme.”