Business confidence in Wales rose five points during January to 13% on the back of growing optimism over firms’ business prospects, according to the latest Business Barometer from Lloyds Bank Commercial Banking.

Companies in Wales report higher confidence in their business prospects at 14% and higher economic optimism at 12%. This gives an overall confidence of 13%.

However, businesses’ hiring intentions showed that a net balance of less than one in 20 (4%) businesses in the region expect to hire more staff during the next year, down five points on last month.

Across the UK, overall confidence rose 13 points to 23% as firms’ optimism in the economy soared 22 points to 24%, while confidence in their own prospects increased four points to 22%.

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

Across Wales, a net balance of 17% of businesses said they felt that the UK’s exit from the European Union was having a negative impact on their expectations for business activity, compared with 6% a month ago.

Amanda Dorel, regional director for Wales at Lloyds Bank Commercial Banking, said:

“The medium-term certainty provided by December’s general election outcome looks to have boosted Welsh business confidence and we’d expect growth plans that had previously been mothballed to now be revived. That being said, it seems that the UK’s exit from the EU remains a cause for concern among business owners and is contributing to the current mood being more tempered than in other parts of the UK.

“With the employment market remaining relatively tight, firms will be looking to invest in the resources already at their disposal, so it’s critical that they have the right funding and advice to hand. We anticipate lending up to £1.1billion to Welsh businesses in 2020 as part of our plan to help Britain prosper.”

Regional picture

Businesses in London had the highest confidence at 38%, ahead of the South West at 34%, and the East Midlands at 31%.

Those in Scotland were the least confident, with an overall confidence of -4%, 27 points below the national average.

National overview

In January, overall business confidence saw a marked improvement in the construction and services sector with construction increasing 15 points to 27%, while services increased 17 points to 21%. Confidence in the retail sector increased by two point to 24%, while the manufacturing sector saw a decrease of six points to 21%.

 Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, said:

“After a turbulent 2019, it is encouraging to see a solid rise in overall business confidence to start the new decade. These results, if sustained, could signal a stronger economic growth at the start of 2020, although risks to the central outlook remain.”