Welsh Business Confidence Plunges into Negative Territory
The latest business confidence monitor from the Chartered Accountancy membership body ICAEW reveals a significant downturn in sentiment among Welsh firms. According to the survey, confidence in Wales has declined into negative territory, primarily driven by record-high tax concerns and pre-Budget uncertainty.
Sharp Decline in Confidence Metrics
In the final quarter of 2025, business confidence in Wales stood at minus 7.8 on the ICAEW's index. This marks a sharp drop from the previous quarter's figure of plus 0.9. Although this reading is above the UK average of minus 11.1 for the same period, it remains well below the historical norm for Wales of plus 2.8.
Record Tax Worries and Regulatory Pressures
A record 69% of Welsh businesses identified the tax burden as a growing challenge, surpassing the national average of 64%. This heightened concern likely reflects the financial pressures associated with upcoming tax changes, including higher National Insurance contributions and the impact of pre-Budget speculation.
Regulatory issues also remain a significant concern, with 60% of firms reporting them as a growing problem. Additionally, nearly a quarter of companies (23%) highlighted government support as a challenge, reaching its highest level since early 2024.
Mixed Economic Outlook and Export Expectations
Despite the overall decline in confidence, the outlook is not entirely bleak. Welsh businesses anticipate export growth of 7.0% in the year ahead, almost double the UK-wide expectation of 4.1%. This strong export forecast suggests potential for modest economic improvement in the coming months.
However, other economic indicators present a more subdued picture:
- Profits growth in Wales is expected to slow to 1.0% over the next 12 months, the lowest rate in the UK.
- Employment growth remained subdued in Q4, rising by just 0.1%, the slowest expansion of any UK nation or region.
- Staffing levels are projected to improve next year with growth of 0.6%, though this remains below both the historical average for Wales (1.2%) and the UK-wide projection (1.3%).
Salary Trends and Future Projections
Salary growth increased to 3.3% in Q4, despite softer employment demand. Looking ahead, wage growth is expected to moderate to 2.4% over the next year, slightly below the UK average.
Expert Commentary and Call for Support
Robert Lloyd Griffiths, ICAEW Director for Wales, commented on the findings, stating:
"These are undoubtedly uncertain times for businesses, with a range of economic pressures shaping decision-making and sentiment. It's understandable that confidence has fallen, given the wider national picture and the challenges firms continue to navigate."
He added: "While sentiment is currently at a low ebb, the strong expectations for export growth this year is an encouraging sign that a modest economic improvement is possible in the coming months. Welsh businesses continue to demonstrate adaptability and ambition, even in a difficult climate."
The ICAEW emphasised the need for further support and relief measures to help Welsh businesses manage rising costs and maintain competitiveness. Both the Welsh and UK governments are urged to create an environment that supports investment, reduces complexity, and enables growth.
