Business confidence levels in Wales have fallen at a faster rate than for the UK as a whole, according to new research from Lloyds.
The bank's business barometer for September shows Welsh firms reported lower confidence in their own trading outlook month-on-month, down 43 points at 22%. When taken alongside their optimism in the economy, down 34 points to 9%, this gives a headline confidence reading of 16%, versus 54% in August 2026. Anything above zero is a positive reading.
UK confidence drops to lowest since April 2025
Overall, UK business confidence fell 12 points to 41% in September, the lowest level since April 2025.
Despite this, firms in Wales reported stronger customer and market demand (51%) and improving inflation or cost pressures (36%) as the leading drivers for optimism in the economy.
Growth plans and investment priorities
For those expecting business activity to increase in the next year, 76% cited stronger customer demand as a catalyst, while 43% pointed towards increased investment in capacity or technology.
Looking ahead to the next six months, Welsh businesses identified their top target areas for growth as investing in their team, for example with training (46%), entering new markets (38%) and evolving their offering, for instance with new products or services (36%).
Nathan Morgan, area director for Wales at Lloyds, said: "While confidence has dipped this month, it's positive to see businesses in Wales continuing to invest in the things that will support their long-term growth. Upskilling is clearly front of mind, with almost half of firms looking to invest in training over the next six months. Alongside plans to enter new markets and develop new products and services, that suggests businesses are continuing to look ahead and adapt despite a more challenging backdrop.
"Strong customer demand also remains an important source of optimism, and firms that continue to invest in their people and capabilities will be well placed to make the most of new opportunities as they emerge."
Smaller firms see bigger sentiment fall
On the overall UK position, Amanda Murphy, chief executive of Lloyds Business and Commercial Banking, said: "While confidence among larger firms remains strong, smaller businesses have seen a fall in sentiment as they continue to navigate higher costs, inflationary pressures and global uncertainty. Overall confidence remains above its long-term average, and most businesses still expect activity to grow over the coming year, underlining the resilience of UK firms. Ensuring smaller firms can share in future growth will be crucial in the months ahead."
